Borrowers with good credit should strive to maintain their credit rating by selecting cards that make sense. Here’s the scoop — your good credit rating can easily slip if you end up choosing the wrong credit card product. If you slip up even once (as I have), it can cost you thousands of dollars in the long run through increased fees and higher rates on existing accounts, reduced opportunities for good rates on future products and the potential for being denied credit in the future. So yeah, it’s pretty important to make sure your credit stays healthy.
@Adam, those are good points. On that note, I put together some tips to help you maintain your credit rating as you use your credit cards. I’ve shared these ideas before, but it doesn’t hurt to reiterate them.
Only open credit cards with favorable terms. Credit cards that offer high interest rates or excessive maintenance fees in exchange for a few rewards or a higher limit will only cost you money in the long run. Instead of opting to only accept pre-approved offers that come in the mail, compare card products online and choose the card that offers you the benefits you need at the lowest cost you are afforded.
Pay on time, every time. Your good credit score depends on you making your payments on time each month. While it is true that the FICO scoring model takes other factors into consideration, your payment history makes up a full 55% of your score, making it the single most important thing you can focus on. It is also important to note that many credit card lenders will automatically set your interest rate to the default rate after the first late payment you make, sending your finance charges through the roof.
Stay within your credit limit. You should never exceed the established credit limit for your account — this is almost as important as remaining current on your accounts. So minimize the number of credit obligations that have balances that are at or near their credit limits. Exceeding the credit limit on your card signals to your existing lender (as well as future ones) that you are getting in over your head. This represents a risk to the lender, who will respond by raising your rates, lowering your limits and even refusing to establish a line of credit for you.
Use credit cards responsibly. Credit cards can be a very effective financial tool, allowing you the luxury of paying for larger ticket items over time or providing financing in the event of an emergency. Using credit cards irresponsibly not only prevents you from having access to a credit line when you truly need it, but can also damage your good credit in the event you find yourself in a difficult financial situation. By only using credit cards for purchases and expenses that are truly necessary or are properly planned, you can ensure that your cards will always be available when you need them.
Your credit score will demonstrate to a card company how seriously you take your financial obligations. The higher the score, the less risk you represent to the company and the more likely you’ll be able to land yourself a card with favorable features.
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Borrowers with good credit should strive to maintain their credit rating by selecting cards that make sense. Here’s the scoop — your good credit rating can easily slip if you end up choosing the wrong credit card product. If you slip up even once (as I have), it can cost you thousands of dollars in the long run through increased fees and higher rates on existing accounts, reduced opportunities for good rates on future products and the potential for being denied credit in the future. So yeah, it’s pretty important to make sure your credit stays healthy.
@Adam, those are good points. On that note, I put together some tips to help you maintain your credit rating as you use your credit cards. I’ve shared these ideas before, but it doesn’t hurt to reiterate them.
Only open credit cards with favorable terms. Credit cards that offer high interest rates or excessive maintenance fees in exchange for a few rewards or a higher limit will only cost you money in the long run. Instead of opting to only accept pre-approved offers that come in the mail, compare card products online and choose the card that offers you the benefits you need at the lowest cost you are afforded.
Pay on time, every time. Your good credit score depends on you making your payments on time each month. While it is true that the FICO scoring model takes other factors into consideration, your payment history makes up a full 55% of your score, making it the single most important thing you can focus on. It is also important to note that many credit card lenders will automatically set your interest rate to the default rate after the first late payment you make, sending your finance charges through the roof.
Stay within your credit limit. You should never exceed the established credit limit for your account — this is almost as important as remaining current on your accounts. So minimize the number of credit obligations that have balances that are at or near their credit limits. Exceeding the credit limit on your card signals to your existing lender (as well as future ones) that you are getting in over your head. This represents a risk to the lender, who will respond by raising your rates, lowering your limits and even refusing to establish a line of credit for you.
Use credit cards responsibly. Credit cards can be a very effective financial tool, allowing you the luxury of paying for larger ticket items over time or providing financing in the event of an emergency. Using credit cards irresponsibly not only prevents you from having access to a credit line when you truly need it, but can also damage your good credit in the event you find yourself in a difficult financial situation. By only using credit cards for purchases and expenses that are truly necessary or are properly planned, you can ensure that your cards will always be available when you need them.
Your credit score will demonstrate to a card company how seriously you take your financial obligations. The higher the score, the less risk you represent to the company and the more likely you’ll be able to land yourself a card with favorable features.