Credit tip number 2 is to reduce your credit card balances below 30% of the credit limit on each credit card; reducing balances below 10% is even better. Credit card utilization has a very high impact on your credit score, so keeping balances low is key to building and maintaining a high score. Check out other tips on my facebook page.
Whitney, this information is so important, especially for people who are just getting out of school and establishing their own credit. I know a bunch who are really responsible, but others seem to have learned from parents that money is something that comes out of an ATM machine. This could be a great niche for you!
Patricia-You're right! I made that same point on another one of my tips about college students/young credit card holders. There is a lack of financial management knowledge for many of our young people.
Debbie-So true! Thank you for stopping by!
Another excellent tip - if folks would follow these guidelines it would really help their credit scores. Once, I canceled a group of cards thinking it was a wise credit move. Ouch - learned the hard way, pay them off, keep them open.
Debb, In the past I did the same thing! I'll be sure and create a tip on that topic!
Some credit card companies lower your limit as you pay them off. That's tough, then, getting them below that 30%. Best way is to pay them off, then pay each those amounts that you charged. Personally, I like debit cards. No money in the account, no spending. However, that does not help your credit scores.
Hi Witney,
I am always vurious if paying the balance off each month makes any differnce to these FICO scores. FICO has many holes in its approach to coming up with credit scores. I use to do commercial credit in the oil industry. Thanks for the blog and suggestion.
Hella- That is true if you like to pay for things in cash. A happy medium could be using a credit card that is designated, as an example, for just gasoline. My friend does this since she doesn't like debt, this way she is able to keep the credit utilization low and pays of the amount in full every month. It's a win win for her!
Bob-From my research I've found that even if you pay your credit card off in full every month, just making purchases on your card is enough to show activity. You would not need to carry a balance to have an "active" credit card. You're right, there are many factors that go into a FICO score and it is a complicated system!
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