This is a common question I get from my credit patients so I thought I would write an article on the topic. I hope this answers my client’s question “Does using your credit card help your credit?”, as well as any random person who found themselves asking this question.
The short answer is yes, using your credit card can help your credit score, but if used irresponsibly and impulsively, it can damage your credit score.
Here is a list of common practices to remember while trying to improve your credit score while also using your credit cards:
Don’t exceed 30% of your available credit limit.
For example, if you own a credit card with a $1000 limit, don’t ever let your balance go above $300 before paying it down. If your limit is $2000, the balance you’ll want to stay under is $600. If you go above 30% it’s not the end of the world, just pay it down as soon as you have the extra funds after taking care of more important bills such as rent/mortgage, utilities, car payment, etc.
Don’t use too much credit in a short period of time.
Your credit card shouldn’t be your default, go to payment option for everything you buy/pay. You should have a debit card and/or checking account for that. Each credit card you own should be designated to paying just one of the many necessary transactions one has to make on a regular basis. For example, have a credit card for gas, and only use that credit card to pay for your gas. Perhaps a credit card for groceries, in which you only use that card to pay for your groceries.
Enable the auto-pay function for your credit cards.
Having a late or missed payment can absolutely devastate your credit report. It can turn an account that is responsible for the addition of 100 points to your credit score into an account that is responsible for the reduction of 100 points to your credit score. Payment history makes up nearly half of your credit score and is without a doubt the MOST important factor that plays into what 3-digit number is reflected on your credit reports. The 3-digit number that is viewed every time you apply for credit.
So, does using your credit card help your credit score? Absolutely! It can have a tremendous positive impact on your score, as well as a tremendous negative impact.
It’s all about using the card responsibly. Make your payments on time. Don’t use too much of your limit in a short period of time (in other words don’t max out your card in one day because of an impulse shopping spree at the mall.)
I hope this article helped to answer the question I’ve been asked by dozens: “Does using your credit card help your credit?” If it did consider becoming a patient. You can learn about my pricing structure in which I only charge per deletion, so you only pay for results!
Also check out the pages below.
The one on the left shows you tons of free iPhone and Android credit builder apps that will help you build credit by reporting to the bureaus.
The one on the right will give you a little insight into disputes themselves and the unique Metro 2 encoded language that the bureaus and creditors used to interpret and investigate disputes and update credit reports accordingly.