Healthy credit habits lend to a healthy credit rating. If you are trying to improve your credit score, avoid these three common credit card missteps:
Don’t Rush to Cancel Your Card: In certain instances, closing a card can hurt your credit score, even if you have completely paid down the card balance. If you are struggling to pay down a card with a high annual fee or steep interest rates, speak to your credit card provider. You may qualify for a balance transfer to a card with no fee, a lower fee, or a lower interest rate. If you are considering canceling one of your oldest cards, you may also want to take a pause. Canceling these can hurt your credit rating, as your score is partly reliant on the longevity of your credit history. There are only a few cases in which you should cancel a credit card: for example, if you have what may qualify as “too many” credit cards, cards to department stores and other retailers should perhaps be the first to go.
Don’t Repay More Than You Can Afford: While it always feels nice to be debt-free, do not drain your emergency fund to repay your credit cards. This aggressive repayment method can cause new financial headaches before you know it! Use a weekly spending budget to help you determine how much you can afford to repay each month, while also keeping your financial obligations and savings goals in balance. Focus on repaying cards with the highest interest rates first.
Don’t Be Afraid to Ask Questions: If you have any doubts about the terms of your credit cards, credit score, or debt repayment options, don’t hesitate to share them! Call your credit card company, reach out to a financial professional, or contact a mentor who has used credit to build their business in the past.
Have questions about credit? Read more at the Syncis Money Blog.