Credit Cards

[SheaWendlandt]

So I have 2 credit cards that I am paying off and trying to build up my credit that way, both with a balance of about $900. Will taking the next 30 months or so, making the minimum payment each month or paying them off in full raise my credit score higher? I don't mind paying the interest if it will raise my credit score higher than just paying them off a full, one time payment.

[NCperson]

my personal opinion:  you are subjecting yourself to something like 24%-29% interest by paying the minimum each month.  

That is VERY expensive to then find out your score didn't rise to meet your expectation.

If you have the money, pay off the credit cards and save yourself all that interest and let the credit score chips fall where they may

then you can use your cards each month with the commitment to yourself to pay them in full each month.  Much better personal money management that way  

[Sjadams]

Paying them off right away should help your credit. At least in the debt to income ratio. If you just make the monthly payment you are going to pay almost double when all is said and done for each card. If you can’t pay one lump sum, the next best thing I’d suggest is making at least double the minimum payment or as much as you can to lower the balance as soon as possible. The only person benefiting from you making just the minimum payment each month is the bank, or who ever issued the credit card, because they’re making a lot of $ off of you over the course of time it takes to pay it off.

[Opus 17]

On-time payments are something like 30% of your score.  Holding a balance is not a positive factor, though, and having a balance that is a large part of your available credit is a negative.  You will get the same benefit from on-time payments if you pay the cards off as soon as you can and then use them for routine monthly purchases (groceries, gas) and pay the balance in full every month.  That way you get the benefit of on-time payments without carrying a balance.  As long as you really can pay the balance in full and don't get behind by over-spending.