It's not bad to pay right out for a car or bike. In fact, that's the best way to do it.
People usually make payments because they can't afford to pay for things at once, but this costs them more in the end.
Credit scores take various factors into account. Most credit scores contain information on how many credit cards you have, the balance you carry on the account, outstanding bills that have been sent to collection, information on any loans you have taken out, and sometimes employment history.
This is how credit cards generally work.
You go shopping and put a total of $100 on your credit card, with no previous balance. When you get the bill for the month, you will owe $100 and it will tell you the minimum payment is something like $20
Let's look at 3 scenarios.
1. You pay in full.
2. You don't pay in full but you pay at least $20
3. You pay less than $20 or nothing.
1. You pay the full $100.
This is the best thing to do. You have paid of your debt and that's that.
Do this most of the time and your credit line will be raised.
2. You pay don't pay in full but you pay at least $20
Since you paid the minimum payment by the due date, you don't get a late fee. However, starting from the due date, you are charged interest on the balance from the previous period, compounded daily.
So on your next bill, you will owe whatever you charged during the new billing cycle, plus what you didn't pay from the previous cycle, plus the interest on that.
Obviously not the best way to go.
3. You pay less than the minimum required payment.
This scenario is the same as #2 with the addition of a late fee.
In addition, the credit card company will probably increase your interest rates.
The best way to build credit would be to open up two credit card accounts, make small purchases with them, and pay them off in full. Taking out loans and paying them back on top will also build credit, but always be sure you can pay back the loan.
Not paying bills before they go to collections will lower your credit score.
