I use Credit Sesame, which creates a report card for your credit score and assigns grades for each category, so you can see where you're thriving and where you're struggling. Credit cards can be optimal tools for making progress in these five areas.Here are five ways that using a credit card can positively impact the elements that determine your credit score, from payment history to your length of credit history.
This falls under the "amount owed" category, which makes up 30% of your FICO credit score. The less you owe, or the lower your credit utilization ratio is, the better. Avoid charging more to the card than you can handle — you should pay the total statement balance every month. What's the spending limit on your credit card? $5,000? $15,000? Maybe it's somewhere in between.
How do you increase your spending limit? You should be able to call the credit card company customer service number to request the change. When I made this call, it took less than 10 minutes. You can't guarantee that they'll say yes, but they won't penalize you for asking. Lenders want to see that you can use credit responsibly for a long period of time. The longer you have a line of credit and use it responsibly, the better it looks. Especially if a card has, consider keeping it open — you can put it in a sock drawer or somewhere else out of sight. You should still use it once every year or two to make a small purchase , so the credit card issuer doesn't assume your account is inactive and make the decision to close it.
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