People often ask me questions that I feel might be helpful for others to see as well. Here's one I received recently.
"In terms of our credit rating, would you say we are better off having more credit cards with zero balance and lots of capacity or having fewer cards?"
Credit reports....gotta love the mystery! Here's the answer.....It depends! It depends on how long you've had the cards, how much of a credit balance you carry (or if you carry a balance), the credit usage (the amount you card vs. your limit...ie how close you get to your limit) and how many cards you have! That really helps huh! ;)
Typically if you've had a credit card for a LONG time, it's best not to close it because this will actually drop your score. But if you have 30 cards even with zero ....that's not the best for credit ratings either! You typically want to have a few cards and keep low balances on your cards and not get near the maxed out amount (which also has a negative impact on your credit score).
For a great credit report learning tool, go to Brightscore.com. It's worth the money to learn about how credit reports work and the best way to improve your credit.
2 comments:
A friend of mine swears that it's a great idea to carry a balance on your credit card from month to month vs. paying it off each month. I've never believed it, because it's not what I was taught. But I'm wondering if it's true?
FALSE!! Carrying a balance from month to month ONLY increases the amount of interest you pay. A balance does nothing to improve your credit. In fact, one of the best ways to improve your credit is simply by paying your credit card bill on time every month. Don't miss a payment AND don't carry a balance unless you absolutely must!
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