How Are Your Credit Cards Affecting Your Credit?

| Tedis Baboumian |

Love them or hate them, credit cards are a financial fact of life for many people.But have you ever stopped to think about how they might affect your credit?The thing about credit is that you have to use credit to build it.Therefore, credit cards can affect your credit in a good way when used responsibly.Here’s what good credit card usage looks like:

  • Never carrying a balance from month to month — instead paying the full statement balance by the due date
  • Always paying your credit card bill on time, even if you can only pay the minimum
  • Not constantly opening new credit cards to get discounts and rewards, instead applying for credit when you need it and choosing your credit cards carefully
  • Keeping old credit cards open so you can show a long credit history — as long as you’re not worried about using them to the point where you won’t be able to pay them off each month
  • Protecting your credit card by using unique passwords on online accounts and only shopping on secure websites
  • Carefully reviewing your credit card statements each month to make sure you weren’t subject to any fraudulent charges

These steps can help you avoid falling into credit card debt, build positive credit behavior, and protect yourself from credit card theft.More specifically, here’s how these steps can help you build positive borrowing behavior:

  • Payment history is the most influential factor in FICO® credit scores — so, making on-time payments can help you build and improve your credit
  • The balance you carry on your credit cards greatly affects your credit scores — so the lower your balance, the better (more on this below)
  • New credit is a less influential credit score factor, but opening too many credit accounts can do damage (each credit application takes a few points off your scores — no big deal every once in a while but not likely something you want to do regularly)

Payment history may top the list of credit score formulas for both FICO® and VantageScore®, but the game changer when it comes to credit cards can be your credit utilization. Having a high credit utilization can hurt your credit scores in a big way. Experts say it’s best to keep your total credit utilization below 30 percent — but there’s not a magic change that happens between 30 percent and 31 percent. Basically, the lower you can keep your utilization, the better — with zero being the best. You can also build credit by getting added as an authorized user on someone else’s credit card. This only works if that person’s credit behavior is positive, but in that case, it can help you build credit without running a risk of debt for you.Building credit is important. And here at Dovly we help people just like you improve their credit. How?By enabling you to proactively monitor your credit, flag errors and initiate disputes with online. As a result you’ll be able to increase your credit score, get better loan terms from lending institutions and pay less in interest.Want to give it a try?Then join us today at!!

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