Whether you are purchasing something from the grocery store down the street or getting some emergency repairs done on your car, you can always use a credit card to help you pay for those things. As one of the most widely used forms of payment, credit cards have many benefits. From getting you out of a quick jam or making a large payment, there are many good things about them. Although there are proper ways to use a credit card, if it is misused, you can dig yourself into quite the hole. Running up your balance will not only sink you deeper into debt, but also hurt your credit score. A credit score is one of the most common ways banks judge you when issuing a mortgage or other type of loan. The more negative damage you do to your credit, the more your credit score will take a hit. By avoiding these credit mistakes, you will be able to keep your score intact and not let your credit get out of hand.1.Paying credit card payments on time
Continually using your credit card for every single purchase you are going to make will run up your balance and cause you to sink deeper into debt. One of the best things you can do to decrease your credit card balance and improve your credit score is to pay your bills on time. Credit scores are determined by several factors and 35 percent of your score hinges on you paying your monthly minimum payments on time. If you fail to do this, your score will be negatively affected and you will also be assessed late fees. It won't be fun to have even a greater balance on your card, so make sure you keep everything in check.
2.Bypass store credit cards
We have all been in the situation of standing in a long checkout line at a department store. Patiently waiting, especially if it is busy, can seem like an eternity. While in line or when checking out, you may be asked if you would like to open a store credit card. These are very common for department stores and may be useful to those who are serial shoppers. The sales people even try to sweeten the pot by saying you will save a certain percentage on your purchases for the day. This may seem like a great deal, but getting a store credit card may hurt you more than help you. Store credit cards usually do not have a very high balance and come with high interest rates. Using a card with such a low balance will increase your utilization rate the percentage of how much balance you have compared to your limit.
Along with having adding more debt to your name, opening up this card will also cause a hard inquiry on your credit report. When lenders are going to open a new line of credit for you, they will access your credit reports. Too many hard inquiries on your report can cause your score to be knocked down a few pegs. So before you decide to save some money while shopping, consider what you are getting yourself into.
We have all been in the situation of standing in a long checkout line at a department store. Patiently waiting, especially if it is busy, can seem like an eternity. While in line or when checking out, you may be asked if you would like to open a store credit card. These are very common for department stores and may be useful to those who are serial shoppers. The sales people even try to sweeten the pot by saying you will save a certain percentage on your purchases for the day. This may seem like a great deal, but getting a store credit card may hurt you more than help you. Store credit cards usually do not have a very high balance and come with high interest rates. Using a card with such a low balance will increase your utilization rate the percentage of how much balance you have compared to your limit.
Along with having adding more debt to your name, opening up this card will also cause a hard inquiry on your credit report. When lenders are going to open a new line of credit for you, they will access your credit reports. Too many hard inquiries on your report can cause your score to be knocked down a few pegs. So before you decide to save some money while shopping, consider what you are getting yourself into.
3.Closing out a card with zero balance
There is no greater feeling than paying off the balance on your credit card. Knowing that you will no longer need to make anymore payments can cause anybody's stress levels to go down. You may think just because your balance has dwindled to a good amount, you will have to close the card. Its great you no longer have anymore balance, but you will want to resist the urge of closing that particular account.
By closing out an account that has zero balance, you will be wiping that card's information clean off your credit report. A credit report will have all the information and history about your lines of credit. From late payments to department store credit cards, any credit activity you have ever had will be on that report. Paying off your balance will lower your credit utilization rate, which is good to keep it around 30 percent, but closing it entirely will result in a higher percentage, thus hurting your score. So before you close the books on one of your cards, think it through.
4.Increasing your credit limit
If you find yourself in a jam and need your credit limit increased, you can contact your credit provider and ask them, as long as you have a valid reason. Although getting an increase can help you pay for things, this avenue can cause your credit report to get another hard inquiry. Too many of these, even if they are done by providers, will hurt your score. If you do decide to do this, ask your credit provider if they will make a hard inquiry. Every credit card company is different.
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