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Does How Much You Pay Affect Your Credit Scores?Everyone knows that paying your bills on time is essential if you want to get — or keep — strong credit scores. But does the size of your payments affect your credit scores? Our reader Nicole asks:

I’ve spent the last year doing my best to clean up my financial snafus. One of the things that I did was get myself on a budget; as I am paid weekly, I broke down my bills into weekly payments and pay everything when I get paid on Fridays. It has taken the better part of the whole year to get everything under control, but with this I’ve been able to pay off the smaller of my two credit cards and stay on top of my bills and not splurge on ‘ghost money’ that is sitting in my account, waiting to be used.

But when I look at my credit report, it is showing the weekly payment amount rather than the total amount paid. Does this affect my score badly as it looks like it is less than the amount required?

I checked with Nicole to make sure that her credit reports don’t list any late payments, and she confirmed they don’t. I then turned to Credit.com’s credit scoring expert Barry Paperno for advice on how these smaller payments might impact her scores. Barry weighed in: “If there’s nothing showing as past due there won’t be any negative impact to the score from making weekly payments. The FICO score doesn’t look at the payment amount at all. Good question, but nothing to worry about.”

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Free Tool: Credit Report CardJeff Richardson, vice president VantageScore Solutions concurs. “As long as the lender is reporting the account as current during the previous month, and the weekly payments cover the minimum amount due, then there would be no impact from paying a bill weekly,” he says.

For many of our readers, I imagine the idea that the payment amount doesn’t affect your scores will come as a surprise. In fact, I’ve heard many myths about how payments affect credit scores over the years, such as:

I pay more than the minimum on my credit cards; that must be helping my scores. Paying more than the minimum due may help your credit over the long run. Not only can it cut your interest costs, but it can help you pay down your balances faster. But it doesn’t boost your scores immediately.

I pay my balance in full each month so that helps my scores. This one can be tricky. Your credit report lists the balance as of the date the lender reported it, but there’s no specific notation that indicates you paid in full. Depending on the timing of your payment and the issuer’s reporting cycle, your account may list a balance even if you paid it off entirely when due.

For anyone wanting to try Nicole’s strategy, my advice is to proceed carefully. Make sure your issuer can accept multiple payments throughout the month and keep good records in case they mess up and count you as late. Always make sure you’ve paid at least the minimum payment due each month to avoid a late payment on your credit, which can drop your credit scores significantly.

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  • Dave

    Gerri

    You were really helpful last time so thought of asking you another Q on credit card debts and FICO.

    All 3 of my credit cards were charged off by the creditors in 2010. One of them sued me and I hired an attorney who helped me negotiate settlement. So I’ve been making monthly payment since my financial situation has improved somewhat and it keeps getting better.

    And other two are still in collection.

    But my FICO has not improved. So I’m debating whether it’s a good idea to even keep paying that monthly amount. And the total amount of all 3 debts are roughly $7,000 to $8,000.

    Not sure if bankruptcy is a good idea for such small amount.

    So what’s your expert advice on how to raise FICO given my situation?

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  • janusz Stanisz

    Does transferring balances to a low into rate with a current credit card affect my credit score. Do understand the savings but the score is more important. It makes me feel as if I have to always in a way pay to get the score I am looking for.

  • Barry Paperno

    Hi Janusz,

    Good idea to ask about the scoring implications from a balance transfer. It makes no difference to the scores whether a credit card balance resulted from purchases or balance transfers. The same rules apply – pay on time each month and keep the credit utilization (balance/limit ratio) low – to avoid hurting your score. So, if that balance transfer maxes out the account receiving the transfer, the score is going to suffer until that balance is brought down.

    -Barry

  • jc

    interest can only be extracted from one monthly payment – right?

    • http://www.Credit.com/ Gerri Detweiler

      I am sorry I don’t understand the question. Most credit card issuers charge interest using the average daily balance method which means they average your balance for each day of the billing cycle and charge interest on that amount. Is that what you’re asking?

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