06-22-2011 11:16 AM
I am thinking about getting a Best Buy credit card, because it's offering 18 month interest freee payment plans, so that I can buy a washer/dryer. My question is, will only paying the minimum payments every month affect my credit score negatively? Right now I have excellent credit, and I always pay the balance on my credit cards...so I'm worried carrying debt for several months will dent my score.
Does anyone know how this works and give me some advice?
Solved! Go to Solution.
06-22-2011 11:20 AM
06-22-2011 11:23 AM
Approximately 35% of your overall FICO score is due to "utilization" aka the balances you run up in relation to your limit.
If you keep a good utilization the impact of the BBY card will be minimal. Example:
Let's say you get a BBY card with a $3000 limit and put $600 on it with the 18 months promotional financing - that's very good utilization. Now conversely if you were to put $2900 as a balance on a $3000 limit card that could adversely impact your FICO.
FICO scores don't care about how much you pay monthly to your debt. Just what your balance is in relation to your limit and that you paid the bill on time.
No banks that I know of report that you pay the bill off in full each month (your other cards) most report the statement balance every month. So even if you pay a card off in full every month putting a high balance on it in relation to its limit can still impact you negatively.
06-22-2011 11:36 AM
06-23-2011 05:25 AM
Also if you get the card, paying the min payment each month will not pay off the balance in 18 months. What you need to do is take the total amount and divide by 18 and pay that each month. To be safe I would divide by 17 just to give you a months cushion.
Give this guy a medal. He speaks wisely. Now if every customer that has posted a complaint on these forums about BBY credit card problems would take your advice, I bet my firstborn child that credit card related problems would drop by at least 70%. People need to seriously take responsibility for their own finances.
06-23-2011 06:20 AM
06-23-2011 08:23 AM
Oh paying it of within 18 months won't be a problem. I ALWAYS make way bigger than the minimum payments. I was mostly just worried about carrying so much debt on my card.
I did end up purchasing about 900$ worth of stuff and my limit was 2040$ - so that's about 44% useage - not great. :-/ But at least I stayed under 50%!
06-23-2011 08:47 AM
06-23-2011 08:59 AM
06-23-2011 09:59 AM
Current utilization is all that matters.
I often rescore credit for my primary occupation and we'll often show revolving debts paid down to impact current utilization.
Past utilization doesn't matter.