Posted on: Feb. 22, 2017 in Credit Score, Credit, Debt

Credit cards can be a necessary part of building credit. Having a credit card, using it wisely, and making payments on a timely basis can help to elevate your credit score. However, abusing a credit card or simply letting it get out of hand can have negative consequences when it comes to your credit card. How you use credit is just as important, perhaps even more so, as if you utilize credit. Here are some things you can do to use credit to your advantage to keep your score as high as it can be.

  1. Pay on time, every time. Late payments will absolutely hurt your credit score. Your payment history comprises about 35% of your score, the largest percentage, so it’s vitally important.
  2. Pay in full every month. Using credit to elevate your score can work, but only if you do it the right way. If possible, do not carry a balance. There may be times when you need to use your card for a little more than you can afford and that’s not going to tank your score, but only paying the minimum just to carry a balance will hurt your score.
  3. If you must keep a balance, keep it low. The less you use of your available credit, the higher your score will be. Try to keep your balance below 30% of the available credit. As you use more credit, your score lowers because you become a riskier borrower. Carrying a balance, particularly one over that 30% threshold, gives the impression you are not able to pay off the debt. Continuing to borrow more without paying down the balance will signify that you might be having money trouble, and your score will lower to warn other lenders that you may not be able to take on much more debt without defaulting.

Using a credit card successfully – keeping a low balance or none at all, and paying timely, will show that you are a responsible borrower that lenders can trust. The longer you can continue this behavior, the more credibility you build and the higher your score will go. These principles are the foundation of successful borrowing and are essential to a high credit score.

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