Understanding Credit Card Usage

When done right, it's a big help with your credit score

Why is this important?

  • 30% of your credit score is how you use a credit card(s)
  • Would you ever skip the first 30 questions on a 100 question math test? No, because you would have to get all 70 question right to get a C-

A big myth

  • Most people think you have to carry a balance on your credit cards to build your credit score
  • You do not need to carry any credit card debt to build a good credit score

The easy way to get more points with your first credit card

  • Get your first card, secured or unsecuredUsually with a score above 620 you can get an unsecured card
  • Secured Cards require a deposit that is equal to your credit limitThere is NO Hard Inquiry for a Secured Card
  • Unsecured Cards do not require a deposit, some do charge an annual feeThere is a Hard Inquiry for a Unsecured Card
  • To avoid interest charges and possible negative credit score impacts do this
  • Simply put Netflix or another subscription on your card and set the card for autopay the full balance each month
  • Store the card in your sock drawer not in your wallet
  • Bingo, you now are getting more points for the credit card use part of the test

This graph show you how over usage can bring down your credit score

Big Penalties for Maxing Out Your Credit Card(s)