Watching Your Wallet: zero out your credit card
LANSING, Mich. (WILX) - You finally paid off that credit card and it feels good to do it. But, are you also hurting your credit score at the same time?
It’s a question Consumer Investigator Rachel DePompa gets asked a lot.
Sure, experts are always telling you to pay down those cards first so you don’t have to pay interest on your purchases. But if you want to raise your credit score, there’s a catch.
As it turns out, you’re better using 1% of your credit limit as opposed to zero, according to our partners at the financial website Nerdwallet.
The two biggest factors that make up about two-thirds of your score-- are paying on time and the amount you owe. That credit utilization is one of the easiest and quickest ways to boost your score.
Card issuers report your new balances to the credit bureaus each month immediately changing your utilization. If you can’t get it down to 1%,, then shoot for 10%.
And just so you know-- the top 25% of FICO credit scorers use about 7% of their credit limits. How else can you boost your credit score? Go to annualcreditreport.com and check for errors. Mistakes are common and can have a drastic effect on your score.
Don’t close credit card accounts. Also, if you apply for any new card, make sure it’s been at least six months since your last credit application.
Copyright 2020 WILX. All rights reserved.