Credit Score Boot Camp – Part 3

MANAGE YOUR CREDIT CARDS WISELY: Show your credit worthiness!

Many people make the mistake of rushing to cancel credit cards in an effort to improve their credit score. Bad idea. High balances are the problem; your credit score is based on your balances relative to your available credit. Those cancelled cards represented “available credit” so canceling then could actually hurt your score!

Ideally, you want to have a few credit cards with reasonable interest rates that you use regularly and pay off promptly. Look at your credit card limits and calculate 30% of each card’s limit. Consider that your upper spending limit and stay within it. Same goes for any lines of credit. Follow the 30% rule and stay on top of payments.

Paying down your debts to under 30 per cent is a great way to boost your credit score. If you need to carry a balance, it’s better to be below the limit on more than one card, than at or over the limit on one card.

 

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