1. pay only the minimum payment
This seems to be the best way to make a payment on a credit card, but there are some major drawbacks to pay only the minimum payment. The biggest drawback is that you pay more money for overtime in interest. Pay an extra $ 15 to $ 20 per month may not seem like it'll make a huge difference, but that extra money starts to add up and soon you pay hundreds of dollars in interest.
An additional disadvantage of paying only the minimum balance is that it can affect your creditworthiness. If you do not pay your full balance each month, lenders may think you have taken on more debt than you can handle. It is important to keep your credit rating if you intend to apply for a loan or credit card. In addition to paying more than the monthly payment, you must also make sure that you make the payment on time, as it represents 35 percent of your credit score, according to FICO, and can have a negative impact on your credit score, which is also an important factor in the opening of a new loan or credit card.
2. Closing old credit cards
This is a bad habit that most credit card holders are guilty. Most think that once they pay off a credit card, it is in their best interest to close the card to not be tempted to build a balance. Although this seems like a good idea to remove the temptation, closing the card may affect your credit utilization ratio, which can have a negative impact on your credit score.
Most experts recommend that it is best to keep your credit utilization rate between 10 and 30 percent. It should be noted that the use of credit is calculated only at the revolving debt (credit cards), as opposed to debt tranche has a fixed number of payments, such as mortgage or auto loans.
3. Maxing credit cards
Although there are circumstances where you might need to use most or all of your available credit, it is best if you pay the balance as quickly as possible. If you do not, this can have a negative impact on your credit score. Like closing old credit cards, maxing out your credit cards or heavy balance raises your credit utilization ratio.
In most impact on your credit score, maxing out your credit cards also puts you at risk of accidentally exceed the credit limit either with interest or incidental expenses. It also makes it difficult for you to pay the balance off, especially if you're only making the minimum payment.
4. Request for several credit cards at once
The opening of new credit cards is one way to positively affect your credit score because it adds to your credit total available, which lowers your score using credit. That said, demand for several credit cards at once can have the opposite effect on your credit score. Too hard on your credit report issues can have a negative impact on your scores, which make you look desperate for credit.
What is a difficult investigation? Each time you apply for a credit card (or any other type of loan) and a lender pulls your credit report, it shows on your report as a hard credit inquiry. Having too many applications at one time had a negative impact on your score because it may look like you are desperate to get more credit, which deters creditors to give you more. It is best to apply for a credit card that you know you have approved. If you do not know what credit cards you qualify for your current credit score, here are some options for those with good and average credit
The best card for good credit: Chase Freedom credit card
The best average credit card: Barclaycard Rewards MasterCard - Average Credit Card
Want more credit card options? Learn all the best credit cards for excellent, good, average and bad credit scores here.
5. Ignore the monthly credit card statements
This is a habit that too many credit card holders have become used to. You receive the statement by mail and drop it into the shredder before opening it. Even if the shredding is the safest route, it is still essential that you open the statement and look good through it before you throw out. Verify that you have completed each of the transactions yourself and report any unknown transaction to your bank as possible fraud. This is an important habit to get used to, especially with all store data breaches that have occurred since the end of 2013, including the violation of the target that exposed 110 million customers. By simply checking your statements each month, you can know if you fell victim of a breach of security possible and even catch fraudulent transactions before it's too late.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and has not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but the terms and conditions of card can change at any time. This site may be compensated by the sending credit card affiliate program.