Get confused about how to use your credit cards for the best effect on your credit score?
You know you need credit card accounts – you have been warned not to close any accounts, especially your oldest accounts.
You have heard that you should not have a balance of more than 30% of your available credit in a given month. You know that if you pay more, you should go online and make a payment before your monthly credit card statement is generated.
But you need some kind of balance on these cards each month?
It turns out that yes, you do. But you do not need to perform this balance and pay interest. The best strategy to use a credit card to increase your credit score is to use each month for a small purchase – and then pay the balance in full when your statement arrives.
This demonstrates that you use credit wisely and pay your bills on time. This factor is one that has frustrated more than a cash buyer when they tried to get a mortgage.
Many can not understand how they can have poor credit scores when they do not have a penny. But not because of a dime proves nothing to creditors. They want to see that you may have, and then pay as agreed.
Thus, seeing a little balance and a notation that says “countries, as agreed” looks better and will improve your scores to see no balance. 35% of your FICO score is based on your payment history – how you handle debt.
Your credit card debt is reported to the credit bureaus when your statement is generated every month, so the dollar amount you owe on that day is the number that is reported.
That is why it is so important to pay balances before the statement is generated. how credit reports are set up, one can see that you charge $ 4,000 in business expenses each month and then pay in full. All they see is the $ 4,000 balance. If the credit limit on your card is $ 4200 – it seems you borrowed to the maximum.
30% of your FICO score is based on the amount you owe compared to the amount of credit available to you – so keep debt below 30% of available credit is a huge boost to your scores.
If you think you might want to use the credit in the near future, start using your credit cards as a tool to boost your credit scores. Sometimes just a point or two can make a difference in the interest you will pay.