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Saturday, January 17, 2009

Credit cards help to brighten your credit profile

Indeed, it is true that Credit cards are very useful for building up an impressive and attractive credit profile. Cards are being widely used by thousands of U.S. citizens to either make or repair their credit history for improving their credit score.
We know well that credit cards can be separated in two categories – 1) secured credit cards and 2) unsecured credit cards. Normally, those persons without a credit history keep a secured credit card. The most interesting point associated with secured credit card is that no deep inquiry is done on your credit report once you apply for a secured credit card. Because you deposit your own earned money as security fund to subscribe to such cards….you take them at your own risk. But, unlike this, unsecured credit cards solely depend upon your credit score. Unless your credit score is high enough, you are not eligible to get unsecured credit card. Moreover, a deep inquiry is done on your credit report when you approach a financial firm for an unsecured credit card which remains in your credit report for two years.
Anyway, whether you have a secured or an unsecured credit card, does not matter. Both of them can be effectively used to enhance your credit score. BUT you must use your credit cards on a regular basis, and, more importantly, you MUST pay off the credit card debt on time and try to maintain a transparent card bill payment report. It helps to improve your credit history. An impressive credit history contributes as much as 35% in your FICO score. Moreover, you should not spend away more than 30% of the net credit limit given on each card…. The reason is that more you spend the less will be the balance available on the card ; and the amount owed would increase. This gives negative impact on your credit score.

I would like to share with you all some tips obtained from industry experts about the fruitful use of your credit cards in order to make your credit score go high and to built up a bright credit history:
1) Before shopping anything or paying utility or other bills using your card, make sure that you have sufficient savings to repay the money within the due date. You are required to pay the minimum amount due within that due date to stop the black mark of late payment from being put on your credit report. Moreover, you should repay the credit card outstanding as early as possible for you.
2) If your bank increases the credit limit on your card, you should ask them to lower the limit so that you can keep a control on your expenses and thus, restrict your monthly payment budget. Improving your credit history does not require a high credit limit on your cards.
3) Do not go out on a credit cards collecting spree from different firms. Stay away from a lot of cards—stick to a maximum no. of two so that you can keep track and accordingly cut down on your payments. Your “credit card hungriness” is another negative factor; it creates a bitter impression for your credit score.
4) If you by chance fail to pay off the entire amount you spend on a card at a time then you must not use the card again until you pay back the entire outstanding amount.
5) Always you should apply for credit cards which are free of cost---i.e. no annual charges apply for using them. Do not get influenced by the reward points offer and make purchases only to acquire points.


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