My credit card influence is not limited to access funds only, it also contributes to the credit score. The credit reporting bodies generate a number to give credit card usage insight. The credit providers can also utilize my credit score. They do this to assess my credit value when I apply for a consumer credit loan.
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The Credit Card Influence on my Score
How I use and manage my credit card accounts has a substantial influence on my credit score. From spending to handling payments, I can do much to assist or hurt my credit.
If I’m a regular payer of all my credit card payments, I will go a long way towards assisting improve my credit score. Credit scoring models consider payment history more heavily than any other scoring factor. It accounts for 35% of my FICO® Score.
If I pay before the due date every month, as discussed above it will assist me to improve the score. But If my due date has crossed and I haven’t paid yet, then surely I can be in hot water.
To make sure I never miss a payment, I’ve to set up autopay on my credit card accounts and have enough money in my checking account to cover the payment every month.
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Is a New Credit Card Right for Me?
There’s no denying the credit cards influence. When I use a credit card responsibly, it can assist me to build credit and earn valuable rewards in the procedure. A credit card is also one of the reliable ways to pay for transactions.
But in a few situations, a new credit card might not be a good fit. For example, if I plan to apply for major financing, I will put off all non-essential credit applications in the interim.
A new credit card might also be a bad idea if I’m unsure about the payment of additional debt. This bad financial habit could also trigger a spike in my credit utilization rate. Higher credit utilization might lesser my credit score even if I keep my monthly payments on time.
Are you worried the additional credit limit of a new credit card will be too tempting? If so, it’s better to focus on budgeting and paying off debt first, before opening a new account.
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