Use credit cards smartly and improve your score gradually

A good credit score helps you lead a stable financial life, no matter how bad is the condition of the economy. Credit cards make a big impact upon your credit score. If you handle your credit cards with care, then your credit score will go up. On the other hand, if you misuse your credit card, then your score will very soon will go on a downward slide. It won’t be wrong to say that credit cards can prove to be your best friend or your biggest foe – depending the way you handle them.

Tips to use credit cards smartly and raise your credit score 

Here are some tips that can help you manage your credit cards and boost your credit score with time.

1. Work hard to keep your credit-to-debt ratio well below 30 percent  

The ratio of your credit card balance to your credit limit is basically termed as credit-to-debt ratio. Make sure you keep your credit card balance below your credit limit. A 30 percent credit-to-debt ratio is good for your credit score. Go through your credit card statements in every month. This would help you know if you’re approaching towards your credit limit. Also, find out if your creditor has slashed your credit limit.

improve your credit score

Improve Your Credit

2. Open and terminate credit accounts wisely. Do not make hasty decisions.

Avoid opening too many credit card accounts within a short period of time as it gives a red-signal to the creditors. They feel that you must have some problems or else why you should desperately apply for so many credit cards. On the contrary, do not terminate your credit cards as this would negatively affect your payment history. This in turn would ruin your credit score.

3. Use your credit cards to make various purchases

It is a good habit to purchase things with cash. It helps to keep your credit card bills under control. However, don’t stop making purchases through credit cards. Use credit cards at least up to the minimum level. If you start ignoring your credit cards, then your creditors will also begin neglecting you. Your account will be closed and you score will drop.

4. Pay your credit card bills on time

Timely bill payments help you build good payment history, which accounts for 35 percent of your credit score. Go for automatic monthly payments so that your creditors always receive payments on time.

Finally, don’t depend upon your debit cards in order to raise your credit score. These cards are good for your finances. However, they won’t affect your score in a positive or negative manner.

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