Expert: David McArthur - 12/21/2008

Question
Hi David,
I have been told that it is helpful to your credit score to always pay more than the minimum payment on your monthly credit card bills.  I realize it's helpful to pay more than the minimum to pay them off and get out of debt.  However, I've been told that if, for instance, your monthly payment is $300, then it improves your credit score if you pay $301 instead because it shows you are paying more than the minimum.  Is this true?  Thank you.


Answer
Hi Chris,

The way it works is that 30% of your score is based on your utilization ratio.  It is tiered from 5-50%.  The more of your total credit limit you use from month to month the lower you score.

All that means is the less you carry over from month to month on your card the better.  $1 here or there is not going to be of any real difference.