Impact of credit cards on credit scores.

Credit scores are important for determining an individual’s ability to pay back a loan. If you have poor credit scores, your only option would be to get a bad credit loan which is a loan for people with poor credit scores.  Credit score calculation looks at your financial health over a long period of time. It will take into consideration factors such as late payments on your mortgage or credit card, delayed payments for whatever reason; even skipping your rent can impact on your credit score negatively.

 One of the biggest challenges most people face is the use of credit cards. Most people do not realize that using a credit card is actually taking a loan because you will have to pay back the money you spend. The high credit limits are usually as a great way to entice people to apply for credit cards.   The best way to make sure that your credit score is good is to make sure that your credit card balance is low and you do not make any late payments or overdraw the account.

 So, the question arises, does having multiple credit cards affect your credit score?  

The answer is yes and no, yes because if you’re not able to make the payments, it’ll impact negatively on you. And no, because as long as you are able to handle the payments then you should be fine.

 Credit scores calculations use on a number of factors including payment history, the amount spent on credit cards, length of credit, credit mix and the new credit lines you take. Making sure that you make your payments on all your bills as per the agreement, whether monthly or weekly, is very important. If you never miss a payment on your credit card, then it will not impact your credit score. Keep track of the payments especially if you have more than one credit card, even if you need to put a reminder because the reality is that with the demands of life you can forget some things. Remember your scores come from the reports that the credit card issuers share with the credit report agencies.

Be careful about the limit you put on your credit cards. How you utilize your credit card is very important because if you spend above your limit, you will be getting yourself into debt and may not be able to make the payments.

It is also important to note that every time you apply for a new credit card, you are basically taking on a new line of credit and lenders will do a hard pull check in the inquiries made to the credit reporting agencies. The more the inquiries, the larger the impact on your credit scores. Having too many credit cards could actually work against you, so you may want to limit the number of credit cards you have.  Just remember to be responsible in how you use your credit card and always make sure that you can make the necessary payments.