Does Paying More Than the Minimum on a Credit Card Increase Your Credit Score?

Paying more than the minimum on your credit card does not directly affect your credit score, but the more you reduce your debt usage the better your score becomes. Card providers typically set minimum monthly payments at just 2 to 3 percent of your card balance, which makes for a slow repayment period and more interest earnings for them.

Minimum Payments

Your monthly credit card statement shows your minimum payment due. Many consumers opt to pay just the minimum balance required because of budgetary concerns or simply to have more discretionary spending money. However, paying only the minimum not only delays paying down your debt, which does help your credit score, but makes your costs of borrowing much higher in the long run.

Check Your Credit Score

Three reporting bureaus -- Equifax, Experian and TransUnion -- prepare individual credit scores. Each of these agencies has its own scoring model, but all are based on the well-established FICO scoring model, developed by the Fair Isaac Corp. The FICO score includes numerous specific factors, generally categorized into five areas -- credit history, length of credit history, amounts owed, types of account, and new accounts. Paying more than your minimum payment has the most impact on the amounts-owed section that includes your debt in use and available credit amounts.

Benefits of Paying More

Paying more than your card minimum makes financial sense, according to the website Financial Wisdom. You can save significantly on interest even with a few extra dollars per month. The affects on your credit score may evolve slowly, but over time, reducing your debt relative to your available credit boosts the amounts-owed section. That boosts your score.

Debt-Utilization Example

Assume a $10,000 credit card limit with a $7,000 balance. This is a 70 percent utilization, which FICO considers high. Lenders prefer that you have lower credit utilization before issuing new debt. If your minimum monthly payment is $150, you would only pay down your debt by this amount in the initial months. As your balance falls, your minimum payment requirement also falls. However, by paying $200 or $250 per month, you quickly pay down your debt, reducing your utilization ratio and ultimately helping your credit.