Do Credit Cards Help Your Credit?
Posted on June 20th, 2011
Credit card Q&A: “Do credit cards help your credit?”
Put simply, a credit card that is reported to the 3 major credit bureaus will help your credit history, assuming you make on-time payments.
Of course, if you open a credit card and miss a payment, even just one, it could send your credit score plummeting.
That’s why it’s imperative to understand that when you open a credit card, you have a responsibility to ensure it is paid as agreed, on-time, every month.
If you follow that simple rule, you will be rewarded with a good credit score, assuming your other lines of credit are in good standing as well.
Conversely, if you let things slip, you could well end up with a bad credit score, all for one shoddy credit card account.
So be sure to stay on top of payments to avoid any mishaps.
More Available Credit
A credit card should also provide you with more available credit.
For example, if you open a credit card with a $5,000 credit limit, that’s another $5,000 you’ve got at your disposal in the credit department.
This means your credit utilization should drop, which should boost your credit score over time.
Both Fico score and VantageScore consider things like balances and available credit, so having an open line of credit with a very low balance will help you in the long run.
But again, if you max out your new credit card limit, you’ll hurt your credit and wind up in a worse spot than in which you started.
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Tags: Cards Help, Credit, Credit Cards, Credit Cards Help
Filed under Credit Report Help |