New Strategies to Save Your Credit Score



 


Due to some new laws that have recently been set into place, firms offering credit lines have been subjected to a number of changes. Since these changes affect the way these businesses collect the consumers' credit usage information, people opting to use credit cards must also change the way they monitor and improve their credit scores.

Some of the plans that have been used in the past still apply to credit usage today. For instance, making your monthly card payment on time is still a good idea as is keeping your open balance within your limits. In addition, card holders are also advised against opening too many lines of credit at once. The new ways the credit scoring system operates is what will cause you to see some changes. Some issuers of credit have now imposed a fee that will be charged once a year.

In addition, credit card holders may also be subject to a separate fee for not using their account as much as the creditors would like them to. Consumers electing to use a line of credit must now decide between paying the new fees or shutting down their credit lines, and shutting down a card is more that just that. Your credit can suffer when you close a line of credit.

The first thing you should know is that opening a new credit card right now isn’t a bad idea. Today, as credit issuers are lowering their standards, consumers are advised to use as much of their credit as they possibly can. Part of your credit score rating is now determined by this amount. Having more cards open shows the creditors that you're reliable enough to have been selected to receive a ton of credit. This makes you seem like less of a liability. As a rule of thumb, having more cards is better than one, two, or even three. I'm not suggesting that you should run out today and sign up for five credit cards. This article is meant to be a guide for making plans that will be carried out over a set amount of time.

The next bit of advice I'd like to share with you is a pretty simple concept: maxing a few of your cards to their limits. Deciding which cards to push can be the tricky part. You must take into consideration what part of your credit information is being reported to the main three credit firms (TransUnion, Equifax, and Experian). Every American Express credit card is exempt from this type of reporting. Amex accounts are passed up when the new system tries to figure out what amount of your available credit you currently use. The new system might even switch your credit balance with the limit available. The TransUnion as well as Equifax systems both pass up these credit account types, experts say.

Asking for reduced interest rates has been recommended in the past. This is not the case as of recently. Credit issuers may review your credit account if you bring something like this to their attention. If they find something on your account that they dislike, they could decrease the amount of available credit that you have. They may also adjust your APR to a higher amount, rather than a lower one or change fixed APR to variable. This is another time that several open lines of credit will be in your favor. Should a credit issuer set higher rates for you, it's simple to transfer your outstanding balance to another card that has lower rates.

Next, closing down a line of credit shouldn't mean that you immediately pay all of your remaining balance. Past situations and laws meant that more interest was incurred on the outstanding amount you owed. Due to the changes in laws, credit issuers cannot higher APR to anything except the amount you will owe on future purchases. Paying your card balance off will omit the card from your amount of credit usage. This could decrease your credit score.

Lastly, I'd like to advise you to allow your work and your personal life to share a space on your credit card. Separating your office and play expenditures doesn't apply anymore, as using a single card for both is safer. On the other hand, if your business expenses tend to add up quickly, it may be better for you to use different cards for each purpose.






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