Do you know what credit cards can do for your credit and what they can do to hurt your credit? Did you know that even if you pay your credit card bill on time you can lose points on your FICO score? Here are some things to know about the credit cards and what they can and cannot do for you.
First, understand that if you do the correct things the cards you carry can build your credit to a wonderful status that will allow you to get any loan you need for any reason.
You should start by making sure you have no more than one of each type of major credit card.
That is a maximum of one Discover, one Master Card, one Visa, and one American Express.
Second, you need to understand that if you carry more than 25% of your limit on your cards you are actually hurting your credit.
Even if you pay your bill on time each month if you have a $1,000 limit and your card balance is over $250 it will hurt your credit and drop your FICO score.
If you max out more than one card it will hurt even more.
Be careful about how much you charge and you will be just fine.
Last, the proper way to build credit with credit cards is to pay the off in full each month.
The easiest way to do this is designate one card for groceries and one card for gas.
You can also keep one card with no balance on it for travel or emergencies.
Then, save the cash you would usually spend on both groceries and gas and use your cards for both of these.
When the bills come use the money in your savings account to pay off the bills in full.
Follow these tips and you will be on your way to using credit cards correctly to build your credit rating and FICO score.
Make sure to only carry one of each major credit card at the most, keep your balance under 25% of your limit, and pay your credit cards off each month.
You will be amazed at how much credit you can build by doing this.