 TITLE: What Is Compound Interest? CONTENT: Can Your Credit Be Affected by Compound Interest?\n-------------------------------------------------\nCompound interest does not directly affect your credit scores. However, missing a bill payment or paying late does. If you have a lot of revolving credit card debt, compounding interest could catch you by surprise and over time make your bill larger than you expected. And if this causes you to pay your bill late, your credit scores could be impacted.\nInterest will only begin to compound on an account when you're not paying a sufficient amount to both the interest and principal each month. This could easily happen if you pay just the minimum on your credit cards each month. That's why you should always attempt to pay off your balance in full each month. Doing so prevents any interest from accruing.\nYour credit scores are also influenced by your credit utilization ratio, which is calculated by dividing your total revolving credit balances by the total of all your credit limits. If you're consistently paying just the minimum each month and using a lot of your available credit, your credit utilization ratio is likely high, which can negatively affect your credit scores.\nTo find out more about your credit card balances, and to see what is affecting your credit scores, consider getting a free copy of your credit report and credit scores from Experian to see what's currently showing in your credit file. END