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I wasn't sure what to title this question. I am new to building my credit score and using credit cards. I am hoping to clear up a few questions I have. One is, if I purchase something on my credit card and setup minimum monthly payments does that negatively affect my credit score? If so, and if I setup payments that are higher than that minimum monthly payment but less than paying in full every month does that affect my credit score less than just making minimum payments?

Are there any cards that will allow me to disburse a debt over a period of time (with interest) without affecting my credit score? For instance, lets say I want to purchase a $300 item from a store which does not have a monthly payment feature to break that up; say for instance, into 3 $100 payments over 3 months. Are there any credit cards that will do that for me without it negatively impacting my credit score?

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    Maybe you should focus more on financial well being than credit score. Credit card debt has one of the worst interest rates so it's always best to pay it off every months. If you need longer credit try a bank loan or wait until you have saved up enough money. If you do this diligently, your credit score will come along of the ride and you are going to save a lot of cash in the process.
    – Hilmar
    Apr 3, 2020 at 22:05
  • @Hilmar You can't build credit without debt.
    – Rob
    Apr 3, 2020 at 22:12
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    Then I guess we're having a semantic discussion about the definition of debt.
    – glibdud
    Apr 3, 2020 at 22:33
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    You're not wrong, but your response to Hilmar's comment made it sound like you thought you actually need to carry a balance and accrue interest in order to have a positive impact on your credit, which isn't true.
    – glibdud
    Apr 3, 2020 at 22:38
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    If you buy a $300 computer with a credit card; you won’t be able to pay it off with $100 per month for 3 months because of interest. After your first $100 payment; they will add $40 for interest on the unpaid $200. After another month, you pay $100 and they add $28 for the unpaid $140; now you owe $168. After the third month; you pay another $100; and they add $13. In the 4th month; you pay the last $81. Took you 4 months and $381 to get that $300 computer.
    – GendoIkari
    Apr 4, 2020 at 7:04

4 Answers 4

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Bear in mind that the credit score is generated by some secret formula that will never be disclosed to you. Attempting to game it is rarely worth the effort, especially if you end up paying excessive amounts of interest in doing so.

The purpose of a credit score is simply to answer the question "if this person borrows money from us, how likely are they to pay it back on time?"

So the most important thing you should do is make payments on time.

I wasn't sure what to title this question. I am new to building my credit score and using credit cards. I am hoping to clear up a few questions I have. One is, if I purchase something on my credit card and setup minimum monthly payments does that negatively affect my credit score? If so, and if I setup payments that are higher than that minimum monthly payment but less than paying in full every month does that affect my credit score less than just making minimum payments?

If you pay the card off in full every month, that shows you pay your debts and have no money problems. That's good.

Paying only the minimum can lead to ever-increasing debt if you continue spending on the card. Not only is that bad for you, as you are paying excessive amounts of interest every month, but if the debt gets too close to the credit limit, then it looks like you have money problems. That's bad.

Are there any cards that will allow me to disburse a debt over a period of time (with interest) without affecting my credit score? For instance, lets say I want to purchase a $300 item from a store which does not have a monthly payment feature to break that up; say for instance, into 3 $100 payments over 3 months. Are there any credit cards that will do that for me without it negatively impacting my credit score?

That would be any credit card. You can pay off as much as you like any month, so long as it's at least the minimum amount. If you want to pay off a third of the debt every month, that's fine.

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  • Well as I said I am new (have never used my card) so I am not sure what "pay it off in full every month" means. Does that mean if I make a $300 purchase on it then my balance that month will be $300?
    – Rob
    Apr 3, 2020 at 22:46
  • If you make a $300 purchase, then your balance will be $300. If you pay $300 to the card provider, that will pay it off in full. If you don't pay in full, when you receive the bill, then they will add interest. I always pay it off in full every month, and never pay any interest at all.
    – Simon B
    Apr 3, 2020 at 22:49
  • So on top of the interest they charge you you also take a hit to your credit score if you don't pay off the full amount every month?
    – Rob
    Apr 3, 2020 at 22:52
  • and there are no cards that will allow you to pay a debt spaced out over a period of time (with interest) without knocking your credit score?
    – Rob
    Apr 3, 2020 at 22:57
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    @Rob Your comments (and question) imply a wrong and dangerous mindset. Worry about not being in debt and buying things you can’t afford; don’t worry about credit score. Paying extra money for an item through interest payments to a credit card is throwing money down the drain; whether it gives you a better credit score or not is irrelevant.
    – GendoIkari
    Apr 4, 2020 at 6:56
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Let me keep it short and simple

Making minimum payments on a credit card is a debt trap because it does not waive off the interest on the outstanding bill amount. If you only pay the minimum amount due, the total bill will multiply quickly, because of the interest charged on credit cards.

Whereas

As long as you pay your balance in full and on time each month, there is nothing wrong with using credit card as it will gradually increase your credit score over a period of time. It showcases the credit lenders an excellent repayment history.

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You must pay a least minimum amount of your credit card as otherwise if you do not make the payment, bank will have to report the same as delay and it will be marked in your credit history for the rest of your life which will impact your credit score very badly. Credit cards can ruin people's life if not used wisely.

You must pay at least minimum amount which would also affect your credit score negatively but not as negatively as not paying the minimum amount. Interest would keep accumulating in the outstanding amount and you will not get any interest free credit days even for the new purchases until you clear all previous outstanding fully. Interest will be charged for all purchases without any credit free days as previous outstanding are not clear.

For splitting our purchases to different months we have an options at the time of purchase and even after we have purchased the same to spread the amount in monthly installments with interest. Banks loves to provide installment systems as they get interest income out of this which is the bread and butter for the same.

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I would pay it in full every single time.

I find these credit score questions funny. People taking loans they don't need to manipulate some funny score. Where I live, there's fortunately no "credit score" system, there's a system that works exactly like it's supposed to work: if you sometime in your life haven't paid something, the missing payment is visible to people checking whether they are willing to give a loan. Everyone who always pays back on time is on the same line. The remaining isn't some mechanical score: it's your wealth, your income, the value of the collaterals, etc.

Hint: if a loan has an interest rate of over 5%, don't take it. Resist the temptation. Say no!

Credit cards typically have a ridiculously high interest rate, except when you always pay the balance in full.

I'm sure when the time comes and you need a loan and have the ability to pay it back in schedule and have the required collateral, most reasonable banks are willing to lend you the money. If someone isn't, well, it's their loss. Take your business elsewhere.

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