IT'S A MONEY THING: BOOST YOUR CREDIT

Credit Card formulas are tricky. We hear that if we pay our bills on time, establish new credit, and combine our good credit with our bad credit we get our credit score. Even with a breakdown, it’s hard to understand. While there are things you can do to improve your credit score, there also might be things you’re doing that are hurting your credit score and you don’t even realize it.

Quiz Time!

1) Do you Carry a balance?

            A) Yes B) No

2) Do you Max out cards to get rewards?

            A) Yes B) No

3) Are you closing accounts?       

            A) Yes B) No

If you answered no the questions above then you are on your way to stronger credit, if you answered yes to the questions above then you might be hurting your credit without even knowing.

Carrying a Balance

I've always been told that it’s good to carry a balance and pay it off, it shows that you are making payments and that helps your credit. While that is partially true, if you can pay off your credit card, pay it off. Why keep a balance and always feel like you’re behind? Your credit is determined by your “credit utilization” or how much available credit you’re using. That’s why you should only use about 30% of your credit line.

Maxing out

If you pay your bill on time monthly, then you probably think that 30% doesn't apply to you. WRONG, it does. The balance that is reported to the Credit Bureaus is usually the balance from previous statements. That means if your credit limit is $1000 and you put $1000 on your card but pay it off, that $1000 is being reported. If your limit is $1000 and you put 30% on your card then $300.00 is being reported. If you have lots of bills and need that full $1000 consider paying off your card throughout the month. This will help reduce the balance that is reported.

Closing Accounts

There are all kinds of myths when it comes to closing your credit cards. Is it good? Is it bad? The more credit cards you open, the more line of credit you have. The more credit cards you close, the more you reduce your available credit. But when you open and close credit cards you miss out on establishing your long term repayment history.  This is one of the most important attributes of good credit.  If you take anything away from anything I’ve said, I hope it’s this; DO NOT OPEN UP CREDIT CARDS FOR EVERY STORE YOU SHOP. DO NOT GET A CREDIT CARD BECAUSE OF THE DISCOUNT. GET 1 OR 2 CREDIT CARDS AND KEEP UP TO DATE WITH THEM. Closing credit cards can hurt your credit, but if you don’t have any to close your A-Okay.

You’re Credit

It’s important to know and understand YOUR credit. Don’t lend your card to others, don’t allow family members to be authorized users, don’t keep your pin number with your credit card either. Be aware, be smart and keep your finances safe. No one can improve your credit but anyone can destroy it. Think about it.

Until Next Time— Spend Wisely,

Alysha