Using Your Credit Cards to Improve Your FICO Score How You Can Improve Your Credit Score Here ph
Credit is a huge part of everyone’s life these days. Without a good credit score you could find yourself unable to purchase a car, house, or in some cases even get hired for a job! That’s why it is absolutely vital that we make sure that we keep our debt in check and keep those FICO scores up to par. Lord knows I’ve had difficulty obtaining credit in the past and have been working diligently to improve my scores so I no longer have to deal with the headaches of wondering if I’ll ever be able to purchase my own home or the embarrassment of being laughed out of a car lot because my scores are pathetic. While I’ve been working to rebuild and establish my credit I’ve read many message board posts and columns about credit repair and I’m ready to share a few things I’ve learned.
First off, credit cards are your friend. That’s right, I’ll even go so far as to say they’re man’s best friend. Like a dog. But just like a dog, if you mistreat them, they can bite you in the rear end. Maybe some of you have had a chunk taken out of your hide by them in the past, who knows. Many people get a credit card in their hands and consider it “free money” and quickly max it out, cannot pay it off, carry balances which adds major interest to your account total and wind up overdrawing their card and slapping a big red X on their credit reports. But let me tell you right now, if you’re just starting out trying to build your credit history or you’re working on repairing you NEED a credit card. Maybe not even just one. Two or three even. But you must, and I repeat must watch your utilization, or how much of your available credit on your card that you actually use. Not only do you not want to max the thing out, but if you’re looking to put that card to work for you, instead of you working for it, you want to keep your utilization under 30% at all times. So that means if you have a credit line of $300 on your card, always try your best to not carry more than $90 of debt on said card. The less of your credit you use, the more FICO loves you. And just to be clear, we’re not talking about just $30 on your statement that you haven’t paid and then you add more to the card in pending transactions. That’s a no-no and the reason is with most credit card companies you never know when they’re going to report all of your account information to the credit reporting agencies. But to discuss that whole “working for you” thing a little further. I mentioned earlier that many people have habits of carrying balances on their cards from month to month and piling up the interest charges from the bank that issued them their cards. In some circumstances some people can’t help it, and that’s understandable. You can only do as much as you are able to. But they’re working for their card and if there’s and extremely high APR on that card and they’re only paying the minimum payment, they’re never going to get those cards paid off and they’ll constantly be in debt working for that bank. When your statement cuts and you receive, always pay in full if possible. Not only to avoid the interest rates, but to give your
credit score that much more of a bump because FICO loves to see you PIF. Speaking of improving scores, I have to throw a misconception in here and just toss this whole theory out before I end this article. My dear wife came home yesterday with a new digital camera. She had some extra money and that’s what she wanted to blow it on I guess. Anyways, it was a rather large purchase. She has some issues keeping her utilization down – usually it’s at a scary 85 to 90%. Well the day before she had paid the card off in full and had her entire credit line at her disposal, but she decided to purchase the camera with cash. She says that her friend told her she could have just put the entire amount of the camera on her card and then just went online immediately after and paid it completely off to help her credit score. WRONG! Credit companies only report the payments that you make on your statement. If you buy something with your card before that and pay it off immediately that’s all well and good, but the credit reporting agencies will probably never hear about, hence it won’t help your FICO one bit. But if you make that large purchase, as always, make sure it’s less than 30% of your credit line. The credit card company could pull a fast one on you and report your balance before you have a chance to get your payment through to them. In closing, yes, credit cards have become a vital part of our lives and building towards our futures. But we always must respect them. Make your card work for you and you could see it send your FICO sky high without you ever having to pay a dime in interest. Please comment below...and I'll send you a free gift.
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Do's and Dont's of the Credit Card Game Here pf Futhermore: Using Your Credit Cards to Improve Your FICO Score
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