(WHTM) — Consumers know how important it is to pay off their credit cards and have good personal credit, but they don’t always know that how they use their cards can impact their credit score. credit.
“The most important factor when it comes to your credit score is making sure you pay your bills on time,” said CNET Money editor Farnoosh Torabi.
Torabi says automating your credit card payments is a great way to make sure that happens: “Set it and forget it… Make sure you’ve connected a checking or credit account. savings to your credit card on file, and so each time this payment is due, it is cleared.
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Another important factor in credit rating is what is known as ‘credit debt utilization’. This is the percentage of the debt of all your credit cards divided by the sum of the credit limits of all your cards.
“Credit officers like to see that utilization at 30% or less. And here’s a pro tip: Americans with the highest credit scores, their debt-to-credit usage is less than 10%,” Torabi said.
Torabi says it’s a myth that keeping a small balance on your credit cards will help your credit score. “By carrying a balance on your credit card, the only person who wins is the credit card company because they earn interest on that balance,” Torabi said.
And while lenders like to see borrowers have a variety of credits, applying for more credit cards isn’t necessarily a good idea. Torabi said, “When it comes to increasing your credit score, it’s not so much how many credit cards you have, but how you manage them.”