Most of new credit card holders think that overpaying the credit card balance may improve their credibility and credit scores, but that’s not true at all. Instead, it does nothing extra benefit to credit score.
It is true that credit card payment history also counted towards the calculation of credit score, but more things are there that may be counted towards the credit score. Credit card payment is just one thing.
Factors that affect credit score of an individual are:
- Payment history affects the most.
- Amounts owed significantly affect the score.
- Credit history length is also one of the important factors.
- Credit mix (car loan, credit card, educational loan, mortgage, or any other kind of credit) is a factor too.
- Number of credit accounts affects the score.
You see, credit card is only small thing here. Many other things are important too here.
Unless you do not own any loan, and just use credit card, then only credit card majorly affects your credit score.
Paying full or more than full amount counted same here, there is no extra direct or indirect benefit of overpaying. So enjoy the full term and pay just before the due date, or you can set auto payment to avoid heavy fees.
So, what happens if you pay more than your credit card balance?
Overpaying your credit card balance will result in a negative account balance.
This simply means that the bank or the financial institution who have issued you the credit card will owe you the money until you make any further expenses on the credit card.