How Credit Cards Affect Your Credit Score

It's no secret that running up a large credit card debt will negatively affect your credit score. To improve your score, you need to eliminate your credit card debt. You can do that in different ways. The first thing you've got to do is to stop spending more than you make. Get on a budget and look for ways you can cut back.

Get a Balance Transfer Credit Card

After you get your spending under control, pay off those debts. Pay as much as you can each month to lower the balance on your cards. But since credit card interest is usually quite high, you may want to approach this differently. You can apply for a balance transfer credit card. With a low introductory interest rate, often 0%, most or all of the money you send to them will go toward paying off your balance. But read the details of the credit card offer. The Interest rate can go up to as high as you were paying in the first place.

Get a Debt Consolidation Loan

Another approach is to get a debt consolidation loan. The interest on the loan will probably be higher than the introductory rate you would pay with a balance transfer credit card. But the advantage is that the rate will not go up in 3-6 months.

Suggestions

Here's a suggestion. Get a balance transfer credit card and take advantage of the low or 0% introductory interest rate. Then when that rate is about to increase, get the debt consolidation loan.

Another suggestion is to get a different balance transfer card when the introductory interest rate of one card is about to expire. That will help you pay off your debt, but may lower your credit score. However, if you have a large credit card debt, paying off what you owe may be the thing to work on first, then later think about steps you can take to raise your credit score.

Don't Make This Mistake

If you want to raise your credit score, you may think that it is a good idea to cancel some of your credit cards. But, whoa, don't do that. Here's why. It will affect your credit-to-debt ratio.

Credit-To-Debt Ratio

One of the factors in the calculation of your credit score is the ratio between how much credit you have available and how much debt you have. If you cancel the cards you don't need, that lowers your available credit. Do you see how that affects your credit-to-debt ratio?

It's better to just keep open the accounts which you don't need. Just be sure you're not tempted to use them. Go ahead and cut up the cards if you have to. You were going to close those accounts anyway.

Credit Card Pointers

You can go to this site: CreditCardPointers.com to get more pointers about credit cards. Find out what the difference is between a secure credit card, a prepaid card and a debit card. Learn how to get your credit card company to lower your interest rate. (Yes, this is actually possible.) See some steps to take to help avoid credit card fraud. Read about a dirty little trick some credit card companies play, and much more.

Get more credit card advice.

0% APR Credit Card Offers (Balance Transfer)