Having a Credit Card Affects Your Credit Score
If you don't have a credit card it still affects your credit score, because without open, active accounts on your credit report, you won't have a credit score.
Having experience with different types of credit accounts — credit cards and loans — is good for your credit score.
Credit Limit and Balance Information
Even though they've given you a certain credit limit, it looks bad if you use up all of the credit they have give you. Maxing out your credit card, makes you look like you need to use all of it, or are cash strapped and reflects negatively on your credit score.
Many credit card issuers also report a "high balance" which is the highest balance ever charged on your credit card. So, if you max out your credit card and pay it off, your credit report can still show a high balance. If you can keep your balance below 30 percent of your credit limit you will look like a responsible borrower.
Monthly Credit Card Payments
Though your last credit card payment amount is included on your credit report, it's not factored into your credit score. Your payment amount can nfluence your credit score. Bigger payments reduce your balance faster and can help boost your credit score. Paying your credit cards on time is one of the most important factors of your credit score.
On time credit card payments boost your credit score and late payments will bring your credit score down. Late payments are reported to the credit bureaus until they're 30 days late. This means you might have to pay a late fee if you're a few days late on your credit card payment, but your credit score should be safe if you pay before you're 30 days past due.
Credit Card Applications
Every time you apply for a credit card, a record of your application goes onto your credit report. Just applying can have a negative affect on your credit score. A lot of applications in a short amount of time can also hurt your credit score. For that reason, it's best to keep your credit card applications to a minimum. So choose the cards that are best for you and you think you will actually get approved for.
The Number of Credit Cards You Have
Often times having a lot of credit cards can also hurt your credit score. Unfortunately, the companies who developed the credit score haven't told consumers the exact number of credit cards that influences your credit score. The number likely varies from person to person. There can be conflicinting information regarding the amount of credit cards a person should have, as Time reported a man with 1,497 credit cards and a near perfect credit score. He apparently only uses one of the credit cards. We're just curious as to how he got approved for that many cards.
Keeping Your Cards Open and With a Lower Balance
The longer you've had your credit cards open, the better it is for your credit score, especially if you have a positive payment history with those credit cards. It is often better to keep an account open in good standing and with lower balances.
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