In order to build credit, you have to start somewhere. But once you get a credit card, it can seem so easy to get another one and another and so on. Next thing you know, you have tons of credit cards that need to be paid off. Anyone that has a credit card or owns more than one knows how hard it can be to accomplish a fully paid off credit card. There is a very fine line between the good and bad that credit cards can do to your credit score. By understanding how your credit cards can affect your score, you can better monitor your usage and more. We discuss the many ways credit card usage affects your score.

Credit Limits and Balance

Most credit cards come with a limit. These limits are based on your occupation, marital status, and how much you earn. The more you use your available credit, the more it can make you look like an untrustworthy borrower. Credit card issuers also have the ability to report a high balance, which is the highest charge you have ever made on a single credit card, which can also be detrimental.

Monthly Minimum Payments

Although it is good when you make the necessary payments on time, it can look even better when you pay ahead and pay more than what is asked for. There is a certain amount of time you should have credit cards opened, but you also don’t want it to be too long. The faster you pay your credit cards off, the better.

Applications for Credit Cards

As you might already know, you want to keep your credit card usage to a minimum. The more you apply for credit cards, the more it seems that you won’t be able to pay them off right away. With that being said, a report of an application can have a negative implication on your credit score. Even worse, applying to several in a short span of time can look especially bad.

The Amount of Credit Cards You Have

Whether they are active or inactive accounts, there is definitely such a thing as having too many credit cards. The number can vary, which means you should keep a close eye on your credit score reports that way you know when to stop using credit cards and applying for them as well. More specifically, it varies based on who you are borrowing from.

The Lifetime of Your Cards

As odd as it may sound, the longer you have your credit cards open, the better it is for your credit score. This is because if you have had positive reports, you will want to keep those reports alive so that they reflect on your credit score. Closing your credit cards can get rid of those positive reports and lower your credit score almost immediately.

Credit Mixes

Loans and credit cards are both reflected on your credit score. Loans are a form of credit, which can help your credit score if you don’t have very many credit cards. It is good to have a mix of both kinds of credit to show lenders that you can handle both and pay off both, especially if you can make all the necessary payments by their due dates.

Closing a Credit Card

Closing a credit card account immediately eliminates the amount of credit available for you to use, which is why it can sometimes hurt your credit score. This is why it is good to leave some of your credit cards open, even if you are not using them all. To keep inactive accounts alive, it is good to add a small balance.

High Balances and its Lifetime

This is one of the worst things to have when you own credit cards. High balances for a long time do not mesh well nor reflect well on a credit score. This only shows lenders and issuers that you cannot pay off your balance in a fair amount of time. With that being said, issuers will be less likely to grant you credit cards.

Work with New Credit Life for a Fresh Start

If you’ve gotten started on the wrong foot with your credit score, there’s no need to worry. That’s what the professionals at New Credit Life are here for. We want you to reach your goals and manifest your dreams without having to worry whether your credit score will get in the way. Contact us today to learn more about how we can help resolve issues with your credit.
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