Debt Consolidation - Loans & Credit Card Bill - Bill Consolidation

Credit Problems? We Can Help!

For immediate assistance call: 
800-823-0537

 Credit practices that may hurt your Credit Score

Credit cards afford consumers the convenience of being able to buy now and pay later. They also have an effect on your credit score. It can be confusing for consumers to know exactly what will hurt their credit scores and what will help as there is no clear cur guide distributed by the Fair Isaac Company otherwise known as FICO. Consumers are then left in the dark wondering what the best course of action is to take. This article will clear up some confusion about what credit card practices can potentially harm your credit.

The primary question most consumers have is about the impact of closing old or inactive cards on their credit score. According to Barry Paperno, a FICO product support manager, “there is no such thing as having too much available credit.” A credit card with an inactive balance will not reflect negatively on your account however a closed out account will. A closed account is viewed as a decrease in available credit and can remain on your report for up to ten years. Instead of closing out the card, try transferring the balance to another card or negotiating the annual fee down. 

Another consideration to make in regards to your credit score is how much of your available credit to utilize. In general, the less credit you utilize the better it reflects on your score. For this reason, it is better to use a small amount of your available credit card balance and pay it off in a timely manner. This is preferable to maxing out your credit cards even if you pay them off right away. A maxed out card appears as a high risk to lenders since there is no indication of when or if the high balance will be paid off. Experts recommend consumers keep their spending between ten and fifty percent of their account limits with the safer amount being between ten and thirty percent. If you are worried about the amount of credit you are using, consider asking the credit card company for an increase in your balance. An increased balance will place the credit that you have used at a lower utilization ratio.

Consumers often worry about the amount of credit cards they have posing negatively on their credit scores. The important thing to note is the more available credit to you the better. In the same vein, the balances on those cards and the timeliness of payments made will have a greater effect on your score than the amount of accounts you have open. Keeping your credit balances low and making timely payments will reflect positively on your score in the long run.

These pointers should assist in clearing up many of the misconceptions consumers have about their credit score. Although it can e difficult to know exactly what effect your credit card decisions will have, following the above guidelines will put you well on the way to making positive, well informed decision for managing your credit. 

Main Menu

Home Page

How We Help

Qualifications

Testimonials

FAQ

Payback

Free Quote

Tips

Reach Us

Articles

Debt & Credit Consumer credit & finance related topics.