While your credit score isn’t the end-all, be-all of life, it can help you get a good deal on loan or find an apartment. And if you’re applying for a job, it can even affect whether or not you get hired. Your credit score is determined by many factors and considers how long you have had your current accounts open and how much money is owed on them.
People often wonder does applying for a credit card hurt your credit, but honestly, it doesn’t. You must remember to follow these tips to maintain your credit score.
Keeping your balance low is extremely important when it comes to credit cards and your credit score. If you have a high balance on your card, it can hurt your score. For example, lenders look at how much money is being borrowed by the borrower; they see that they are paying their bills on time and not exceeding their limit. It also shows them that you are serious about managing your finances responsibly.
You may think that closing an account will help your credit score, but unfortunately, that is not the case. Credit card companies want to see you use your credit card and keep it open for as long as possible. However, if you close an account, it will lower the average age of your accounts and can negatively affect your credit score. If you need to close an account but don’t want to hurt your credit score, apply for a new card with a different bank or network before closing the old one.
When it comes to your credit score, the most important thing is to pay your bills on time. If you’re doing this, then you’ve already done your part. There are plenty of things that can go wrong and cause you to miss a payment deadline. Your best bet is simply not to take any chances: if there are ever any problems with making a payment, make sure you call ahead and let them know what happened. It could save both of you from headaches down the line.
Using your credit card for purchases you can’t pay back immediately is not a good idea because doing so can hurt your score. So, for example, if you do go over the limit, the company might raise your interest rate or charge an additional fee. Your credit score will also take a hit if you are charged interest on the amount of money that goes over the limit because it shows that you have poor spending habits and aren’t able to live within your means.
If you’re not in the habit of paying off your credit card balance every month, it’s important to note that doing so is the best way to build a strong credit history. By charging only what you can afford and keeping your spending under control, you’ll ensure that all of your payments are made on time. This will help ensure that there’s room for other expenses while also improving the length of time it takes for those payments to become part of the average age of accounts on your credit report, which makes up about 30% of most FICO scores.
A pro tip from SoFi advisors, “One credit card application can ding your score by just a few points, but multiple applications could raise red flags for lenders and drag down your credit score accordingly.”
With the right approach and a little bit of discipline, you can improve your credit score and make it easier to get approved for a loan or credit card in the future.