Sometimes, you will not be able to pay your credit card bills completely. In that case, you will end up making minimum payments. But, does it affect your credit score? Let us read on to find out how making minimum payments can affect credit score? 

How Making Minimum Payments Can Affect Credit Score?

Making minimum payments is better than not paying any amount towards your credit card bills. In fact, even if the customer can make only the minimum payment every month, doing so on a consistent basis will not affect his credit rating so badly. But, customers who miss out now and then on making the minimum payments will face a decrease in their credit score

Your monthly payment does not directly impact your credit score, but it affects your credit utilization ratio. Using more of your credit limit will result in the lowering of your credit score. This reduction is only temporary and reducing the outstanding balance will help your credit score bounce back. But, making only the minimum payment will reduce your balance only by a very small amount. Thus, the credit utilization will continue to impact your credit score negatively. Also, if you continue to make additional purchases reducing your credit limit,  then your credit score will hurt drastically. This is because your outstanding balance will increase and your credit limit will lower, thus increasing the credit utilization ratio. On the other hand, if you have a low outstanding balance, say 30% of your credit score and you make the minimum payment, then your credit utilization ratio will not hurt your credit score. 

Report from Issuers

The revolving accounts and latest credit report of customers contain important information, such as credit rating, amount due, past due, the amount paid and balance. The credit rating and balance are the most important parameters that determine a customer’s credit score as they contribute towards their repayment history and credit utilization ratio. The details about the amount due and the amount paid will indicate that the customer has paid the balance completely within the set time frame. However, the number of issuers who report this data currently stands at only 70% of the total.

How to Avoid Making Only The Minimum Payment?

Making only the minimum payment may not help your credit score and your finances always. So, it is important to come out of this habit. So, how to avoid this? 

Eliminate Spending In Areas Where You Can Evaluate how much you  spend every month  and plan how you can reduce the spending. Examine the areas where you can cut down on the spending. These are some of the ways in which you can eliminate your spending:

  • Create a household budget. This will help you in prioritizing areas where you should be spending and you can better allocate your income. This will help you in reducing the credit card balance.
  • Contact your credit card issuer if you are finding it difficult to pay your credit card bills and he may show some leniency regarding your payments. 

Earn Extra Income

Working overtime, picking up a part time job, or starting an activity outside of your job to make money can help you reduce your credit card balances and put back your credit utilization ratio in place.   

Limit Your Credit Card Purchases

Once you have paid off your credit card balance, get into the habit of purchasing only what you can afford to pay in a single month. Then, pay your balance completely each month. In this way, you do not have to pay interest on your credit card bill and can protect your credit score.  

How Is The Minimum Payment Calculated? 

Your credit issuer usually establishes your minimum payment as a fixed amount when your balance is below a certain level. For higher balances, the minimum payment may be a percentage of your total balance. 

Also Read : Credit Card Bill: What is the Billing Cycle, Due Date, and Minimum Payment? How it is Calculated

What Is The Minimum Payment Due?  

The minimum payment due date is given on your credit card statement. If you do not make the minimum payment by this date, then the lender may levy penalties for late payment along with the interest on the outstanding balance. Even if you make the minimum payment, then you owe an interest on the remaining  balance in your credit card account. 

How Do You Find Out The Minimum Credit Card Payment? 

The minimum payment will be on your credit card statement along with the due date.  Do not try to estimate the required payment yourself. Check the amount on your online statement or bill. 


If you can make the minimum payment consistently without missing out, then it will improve your credit rating. Still better, if you can pay your credit card balance in full, because you do not have to worry about outstanding amounts or the interest payable on them. If you cannot keep up with making the minimum payment, then contact your credit card issuer. He may be able to provide you with some relief options. 

FAQS How Making Minimum Payments Can Affect Credit Score?

1:Will your credit limit get reset after you make a minimum payment?

Yes, the credit limit resets after making the minimum payment. In order for your credit limit to rebound fully, you have to pay your total balance - what you spent during the current billing cycle. 

2:What happens if I go over my credit limit but pay it? 

If you cross your credit limit, the card issuer may levy a much higher annual percentage rate (APR), called a penalty APR or default APR. You will find it more difficult to repay your debt because more of your payment will go towards paying the interest.  

3:Why hasn’t my credit limit gone up?

Your credit limit depends on your monthly income. If your income is too low according to the credit card issuer, then the credit limit increase request may not be accepted. If you have already had a back-to-back credit limit increase, then do not expect it to happen soon. 

4:Which of the following does not impact your credit score? 

Factors like gender, race, marital status, education level, religion, political party, and income do not impact your credit score. 

5:Will I be charged interest if I pay the minimum payment? 

You will not be charged interest for making the minimum payment, but credit card Issuers will charge you on the outstanding balance.