How credit card debts Repayment history is one of

How Your Credit
Card May Be Hurting Your Credit Score


When it comes to
getting a good credit score, your credit cards can either affect you negatively
or positively. There are three main things that can damage your credit report;
having too many credit cards, going over the limit of credit cards and having long
overdue credit card debts. Let’s examine them one after the other.

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Having too many
credit cards


Opening more than
one credit card account within a short timeframe can negatively affect your
credit score. It won’t only bring about a drop in your credit score, but card
issuers may think that your financial condition has changed. So you should only
apply for what you need.

However, if you
think you have too many credit cards, the most awful action you can take is to
start shutting down some credit cards without considering the effect it will
have on your credit score. You cannot help your score by closing credit cards.


Going over the
limit of credit cards


Most credit cards
always have a limit, which is the highest amount of credit that is available to
you.  Despite the fact that your card
issuer has given you a specific limit for your card, it looks awful if you
exhaust all the credit. Exhausting your credit card, making use of all credit
available to you, makes you look like an irresponsible borrower and your credit
rating or score will be hurt badly due to it.


Long overdue
credit card debts


Repayment history
is one of the main factors that add to your credit report. Every time you are
delaying the payment of your credit card debts, this has a negative way of
affecting your credit report. Always remember that the amount owned by a person
is the second most important factor in the FICO/credit report. It accounts for
30% of the report.


Both credit
defaults and late payments negatively affect your credit score, but credit
defaults are likely worse since details of the long overdue debt are not
usually removed erased from the credit history even after making payment for
them. This can definitely bring down your credit score for the time being and
keeps on having some impact as long as it stays on your credit report.


Ways to prevent
your credit card from hurting your credit score

Given below are
tips to know how to use a credit card without getting into difficult debts and
that way keeps a healthy credit score. 


1. Pay off the
ones with the smallest balances

If paying down
debts with high interest isn’t comfortable for you to start with, try paying
off the ones with the smallest balances. Begin with the credit card that has
the smallest balance and makes additional payments towards it each month. Keep
on paying the minimum on all other credit cards. Immediately you settle the
smallest balance, proceed onward to the credit card with the next larger
balance and do the same process. 

This technique
makes you feel great paying off all your debt quickly, no matter how small the
balance might balance.



2. Don’t go
over 75%-90% of the credit card’s limit

The more your
credit cards, the more you are able to charge. You might have good
self-control, yet it is better not to entice yourself by going over 75%-90% of
your credit card’s limit. Reduce the number of credit cards you have in order
to maintain a strategic distance from credit debt and therefore improve your
credit score.


3. Treat your
credit card as a debit card and pay in full your bill every month

If you want to stay
away from credit card debt issues, you need to treat your credit card as a
debit card and pay off your bill each month. With that, you will not have to
carry a balance over and totally wipe out the danger of getting soaked into
debt. You never need to stress over whether you will be able to meet the least
payment since your credit card debt has already been fully settled.


4. Use your
card for big transactions and not small ones you can easily forget

Taking the time to
confirm each transaction will ensure that you are not on the snare for
fraudulent activity. If you want to easily remember all the transactions you
did, then you should use your card for big transactions rather than the small
ones that you will easily forget.


5. Always check
your credit card statement, keep receipts, mistakes to look for on card

If anything in your
financial record looks a bit sketchy, check your credit card statement for
vital information and consult your card issuer to discuss any mistakes you may
have found such as wrong charge or fee. 15% of the credit card account
statement have mistakes, so do not make payment for a mistake you did not make.
Even if there is no mistake in your credit card statement, you need to still
review the rest of your account statement.




Using credit cards
imprudently can hurt your credit score, but that does not mean credit cards are
a bad tool. In fact, appropriate use of credit cards might boost your credit
score/records without you taking on extra debt.


While specialists
recommend that you keep your credit card usage below 30%, it is essential to
keep in mind that creditors are also interested in the total amount of your remaining
credit. This implies that if your credit limit is low, it’s not really an issue
if your credit card usage rate is somewhat higher than recommended.














Reference links:

4 Ways Your Credit Card Could Be Hurting Your Business Credit Scores