How Do Credit Cards Affect Your Credit?

By Author: Jennifer Baxt
Total Articles: 200
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Nearly everyone over the age of 20 has at least one credit card. For some, getting a credit card is a process to adulthood, but sadly many people do not realize the full effects that credit cards can have on their credit score.

Credit cards are incredibly important to establishing your credit, but if you use them unwisely, they can destroy your credit almost as fast as a bankruptcy. The first thing you need to remember with your credit card is that it is important to pay everything back as quickly as you can. If you do not have the money to make a full payment, then you should at least make minimum payments on your credit card as this will keep your credit from falling and interest from adding up.

Second, in terms of how many credit cards you should have, it is important to understand the magic rule of two and three. One credit card is often too little to sustain good credit because you will not have enough credit to raise your credit score. However, anything over three for credit cards and you will be hurting your credit by looking like a compulsive borrower. Your credit card total should be two or three, no ...
... more and no less. If you are attempting to establish your credit and worry about getting a large credit card from one of the big companies like VISA or MasterCard, then you can get a credit card from a department store. They are very easy to get, they can help establish and repair your credit, and even if you buy nothing the cards will show up as established credit on your credit report.

Lastly, but possibly the most important point is that you should never, under any circumstances, use cash advances. Cash advances are horrible for your credit; in fact, it is even worse than not paying your credit card for months on end. The reason is that when you buy something on your credit card, the interest rate is usually about 10 to 12 percent. However, when you take money out on a cash advance, you can pay as much as 25 to 40 percent interest on that. Minimum payments will rise, you will fall behind and your credit score will sink like a stone in water.

Having a credit card is not a right, it is a privilege. Unfortunately, too many people do not realize how important it is to manage their credit cards properly so that they do not damage their credit score. However, if your credit score is low, then you can repair it by always paying your credit card bills, or at least making minimum payments, having two or three credit cards, and never using the cash advance option on your credit card. By following these tips, you can fix your credit and maintain good credit for years to come without the worry of falling into a debt spiral that slowly pulls you down into the deep and dark waters of debt.