Regular payments v not full payments question

dings

Hi all

Quick question.

I pay regularly, each month, an amount above the required minimum repayment on my credit card, but don't completely clear the outstanding balance. Hence, my balance is steadily coming down but will take some time.

How does this affect my credit scoring?

Cheers

Dings

newfoundglory

I'm gonna say no, as long as you dont miss payments or default, your credit file should remain fine.

However I guess the answer is a bit more complex than that.

There was talk at one stage of one (or possibly more) credit reference agencies introducing a way of allowing lenders to see which people pay the balance in full each month and those which make minimum payments. I am not sure what came of this in the end. Even if such a system did exist, its effect would be quite subjective - as a credit "rating" is based only on the criteria of that one lender in question, so it varies from lender to lender.

For example, some lenders want people who make minimum payments because they make more money of this. Some lenders find it higher risk, and don't want so many of these.

Ultimately, it comes down to whether your profile matches the profile the lender is looking for - which is just the same as it is currently.

donsaini

it doesnt adversely affect your credit score, if anything it increases it, as you can take credit and pay it back. if you pay off each month, you still get the same things in your credit file.

out of interrest what is your balance, how much do you pay back, what interest do you pay. if not a 0% deal, then it could be that you pay interest on the interest each month. not good. also if you ever took cash out on credit card, usually last to be paid off, so could be paying a large hefty interest rate on that.

YorkshireBoy

My understanding is that all your potential creditor's can see on your "file" are a series of numbers and letters, with (for example)...

'0' representing "payment made on time"
'1' representing "payment one month late"
'2' representing "payment two months late"
'D' representing a "dormant account" (ie not being used)
'8' representing a "defaulted" account

It does not show the amount you pay - just that the payment was equal to, or above, the minimum required.

More information on the above can be found by visiting http://www.experian.co.uk/consumer/index.html and downloading the "Your credit report explained" document.

Martinslovechild

YorkshireBoy wrote:

It does not show the amount you pay - just that the payment was above the minimum required.

My understanding is that a '0' is written to your credit file (indicating payment made on time) providing that you've made a payment equal to or above the minimum required on or before the due date for that month. They don't record whether you made the minimum payment or a larger amount or indeed details of actual amounts paid.

Lopo

I do believe callcredit (the new-ish upcoming 3rd credit reference agency) does actually detail the repayments made, so the credit provider " will " actually see your repayment history in detail. Basically...you can see whether a debt is increasing with further spend even if you are making the required repayments...

I purchased a credit a report from them (usual £2 jobby) some time ago, which detailed all of it...I was quite stunned by this fact, but they did not have all of the details from all the lenders that I use as they are newish to the CRA market and seemingly, the BIG main financial providers do not report to them just yet....

Lopo