Community First Blog

How Credit Card Usage Affecs Your Credit Score

Credit cards can be a great way to improve your credit score. However, you must be careful and manage your credit card use, so you don't get caught in an endless cycle of debt. This debt can pile up until it is nearly impossible to dig your way out of. The following tips will help you manage your credit card use and increase your credit score.


Keep Balances Low
It is important to keep the balances low on your credit cards. Typically, your credit score is highest when you keep your balances lower than 20% of your available credit. As your balances increase, your credit score will decrease. It’s okay to use your credit card, just don't let the balance get out of control.

Use Your Credit Cards
Some consumers mistakenly believe that they should have no balance on their credit card, so they never use their card. This is not true. The credit bureaus score you on your wise use of credit, so you need to actually use your credit card. Make small purchases on the card each month and pay them off when the bill comes due. This shows the credit scoring agencies that you can manage debt and you are smart when it comes to utilizing your credit cards.

Proper credit card use can raise your credit score.

Carry a Small Balance
Your credit score will increase if you carry a small balance on your credit card each month. Typically, between 1% and 10% of your available credit is best. This balance will be reported to the credit bureaus and will show potential lenders that you do utilize credit, and you utilize it wisely.

Keep a Close Eye on Your Balances
In days gone by, credit card use could be difficult to monitor. All month long, you had to write down the charges that you made to your card, and then wait for the monthly statement to arrive in the mail so you could see how much available credit you had left. Then you had to write a check and mail it in to make the payment. Today's technology has made it easy to manage your credit card use. Most credit card companies allow you to check your current balance and pending transactions online, and these are updated in real-time.

Make Payments Quickly
When you utilize your credit card issuer's online access and other features, you can make payments online anytime you want, and these payments post to your account within one to five business days. It is a good idea to log in to your account daily to see what charges have been made and keep track of your spending. In addition, this allows you to see any unauthorized charges that may show up in your account. You have a very short window to dispute these transactions, so handling them immediately is best.

If you have any questions or concerns about your credit profile or the wise use of credit cards, Community First Credit Union can help. Give us a call or stop by and speak with one of our personal bankers today. We can answer your questions and give you advice so you can make your credit cards work for you. In addition, we can help you find the right credit cards and other lending products to meet your needs.