How To Properly Use Your Credit Card To Raise Your Credit Score

April 28th, 2009

moneyfarmerWhen working to raise your credit score, it’s not enough to just get a bunch of new credit cards.  Your score, for the most part, is gauged on how you use your credit account instead of just their availability.  It goes without saying that you’ll need to use the credit responsibly, if your FICO score is going to benefit from it.

Here are a few guidelines to make sure your credit card use nets you in the positive.

1. Make small purchases every month

Use your credit card for small purchases on a monthly basis to keep it active.  If you’re wary about using your credit card (afraid of going into debt), assign it for regular on a controlled expense.  For instance, use it to charge your monthly electric bill, instead of paying cash.  Just use the cash as payment for the card – it works out the same way, while allowing you to build up your credit at the same time.

2. Never carry a balance

Carrying a balance, especially large ones, always hurts your credit ratings.  If you want to derive the maximum benefits on your credit score, pay off any charges you incur every month.  As such, never charge anything more than you can afford to settle within the same month.

3. Use no more than 20% of your available credit

Even when you pay your balance in full month-to-month, keeping your credit card utilization to below 20% will help your score immensely.  While the idea of earning rewards points can be tempting, you’ll need to put a cap on your usage if you want your credit score to benefit.

noel Posted in Credit Card Guides

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