Effects of Credit Cards on your Credit Score | How to Raise Your Credit Score
Having a credit card isn’t just enough; there is more responsibility that comes with it than you might think. It starts from being more responsible enough to consume what you can afford and pay back the charges complete. One thing you must be mindful of is the effects of Credit cards on your Credit score.
It’s important you know that everything you do with Credit cards affects your Credit score. Starting from applying for the credit card to using it. Also, not having a Credit card at all can also, affect your Credit score.
What matters now is how you use the Credit card, because credit card can raise your Credit score as well as hurt it. It all depends on you.
Your Credit Score Information
Your Credit Score details depend on the information on your credit report. It involves the record of your Credit and loan accounts that are maintained by the companies known as the Credit Bureaus. This information is what shows the possibility of your paying back the loan given to you.
At the end of each month, your Credit card issuer and other businesses publish your credit card activity to the major 3 credit card bureaus in the U.S. These reports are included in your personal Credit Score. However, there are other credit card issuers that offer Free FICO Scores to their cardholders.
The reports include your Credit card balance, Credit limit, Payment history, account status and the date you opened the account. All of this information put together can affect your credit score.
Good Credit Card Affects your Credit Score
If you’re a customer who doesn’t have a credit card, it can definitely affect your personal Credit Score. With no open and active accounts on your Credit report, you won’t have a credit score at all. Also, when you have strong experience with different types of Credit card accounts and loans, it helps to strengthen your personal Credit Score.
Using your Credit Limit Very Well
Most Credit cards have a Credit Limit and each credit card issuer has a maximum amount of Credit limit. However, using up your credit limit will be bad for a Credit score. It’s risky if you Use up all your available Credit. It presents you as a risky borrower and your credit score will pay for it.
To be on a safe side, it’s better you keep your credit card balance below 30% of your credit card limit. This will help you to appear as a responsible borrower.
Monthly Credit Card Payments
Your monthly payments can boost your Credit score. This is because your balance is based on how it relates to your credit limit. Therefore, the bigger your payments, the lower your balance and this will boost your Credit score.
So, you’ve to pay to make your payments timely. Making your credit card payments online can help boost your personal Credit score. Always make your payments before the due date of your payment to be on a safer side.
Number of Credit cards you use
Using to make credit cards can harm your Credit score. Though, the exact number of Credit cards to use to stay safe is not yet known from the Credit card issuers. It’s better you ask for the cards that you can manage actively.
Using your Credit card for long
If you have a positive payment history, go ahead and keep your oldest Credit cards. Over time, it’ll help you to build your Credit score. Having a good credit score can help you to qualify for a credit card with better rewards and offers. This can be achieved by keeping credit Cards open and active, good standing and having a low balance on them.