Credit Cards: How To Keep A Good Credit History

Having a credit card nowadays has turn into a necessity for a lot of people and not having one may appear to be unthinkable in view of the need for us to take care of our family and pay for our basic needs.  Without having a credit card could also reflect a negative point to someone’s credit score despite the fact that they have not had one all their life. 

Getting a credit card for the first time or before now have a credit card for a while now but is not knowledgeable of the positives and the negatives that comes with it, you may want to look at several of these guidelines to save you the hassle or rectify any mistakes connected with credit cards.

Late Payments

On time payments is a big bonus for you and your credit score.  In case you are unable to compensate it on schedule, however, you could call and request your bank to give you some sort of consideration and odds are they may hold out your dues or even waive any fees.  Making late payments on a usual basis does not only hurt your credit score, it will also make you pay heavier penalties and interest rates.

Missing on your payments

Related to paying late of credit card bills, more interest fees and penalties are added to your debt.  For you to have a nice credit record, you should prioritize paying your credit card before the end of the month.  Consequencesof a missed or late credit card monthly payment include a “late fee” charge of about $15-$35.  Creditors will also tell credit bureaus of  your late payments and if you don’t improve this practice it will look bad to your credit history.  What’s more, your interest rate is augmented to the default rate which is the maximum interest rate your creditor is allowed to charge you with. 

On time payment is one of the most important things you can do with your financial reputation as 35% of your credit score is based on on time payments. 

Cash Advance

Getting a cash advance on your credit card should, as much as possible, only be used for emergencies or if you can immediately pay for it.  The reason for this is because once you withdraw the cash from the ATM, interest for that money will start to pile-up and there is usually no grace period for it. If you have an emergency such as buying a critically needed medicine, you could first ask if they could charge it to your credit card rather than paying them cash that came from a cash advance with the same credit card.  Why so?  Because making a cash advance will probably raise your credit card’s interest rate.

Earning Points

If you are someone who is eager to buy things with your credit card just to earn points, think of the broader picture and how it could mess with your resources.  If you are always on time with your payments, then doing it might seem okay.  However, if you are time and again late with your credit card payments, you should get around this as much as possible and focus on settling your debts first.

Reaching your limit

If your credit card balance is limited and you have a tendency of going over its maximum value it can also cause your credit score.  Also acknowledged as maxing out, this practice could also make you seem someone who does not know how to correctly budget and may influence your future credit or loan requests.  Maxing out is part of the Credit Utilization criteria which makes up 30% of the overall credit score.