I was talking to someone today about credit cards and the right number to have and how to use them to maximize yours scores and I forget that most people do not know this stuff. Its not like it is taught in school, so i will go over 8 basic tips.
- There is no such thing as having to many open accounts or trade lines. Anyone who says that you have too many credit cards is lying to you.
- Having a good mix of credit is very important, you want to be able to show that you can handle different types of credit. Credit cards, bank loans, auto loans, and home loans are a good example of the different types of accounts that you can have.
- A perfect mix of credit is 3 revolving accounts for every 1 installment loan. So basically, if you have a car payment, you should have 3 credit cards. Again, there is no such thing as having to many open lines of credit.
- Every six months you can call your credit card company and request a credit limit increase. Doing this will improve your scores. You want to have the highest credit limit possible, and have the lowest balances possible.
- Try to keep your credit card balances below 30% of your overall limit or it will start to hurt your scores.
PAY YOUR BILLS ON TIME. Most important thing you can do.
- Be careful of inquires. Every time you apply for a credit card, bank loan, auto loan or home loan it puts a hard inquiry on your account and your credit scores drop a few points. (frustrating I know). Slowly apply for new credit, you don’t have to have 3 new cards all in one year. Get them over the course of three to five years. Inquires only hurt your scores for 1 year and fall off your report in 2 to 3 years.
- DO NOT CLOSE YOUR CREDIT CARDS! Keep them open your entire life. If you close them you end your length of payment history, which hurts your scores.
- Dispute Inaccurate and Unknown items on your credit (or we can do it for and you only get charged for what is removed with our CREDIT REPAIR services).
There may be a few Dave Ramsey fans on here that don’t agree with the idea of having several credit cards. I understand that you can easily get yourself into credit card debt, but you have to be smart. Credit cards are not income replacement. If you don’t have the money in the bank, don’t spend it on your credit card! But, I am teaching you how to improve your scores! And credit cards are a very big part of that!
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Hope this helps!