Over the years, credit cards have become very popular. When credit cards were first introduced, they were used for occasional purchases; now millions of people use them daily for something small like a cup of coffee. There are many types of credit cards available, including those that help people who have bad credit. You should always keep in mind that even though credit cards are great to have, they will also have quite an impact on your credit report.
The credit report is extremely important, especially when it comes to credit cards. Banks and lenders use your credit report to determine if you meet their criteria for a credit card, a loan or a mortgage. Your credit report is the determining factor for your credit, which is why you should never let your credit cards do any type of damage to your report. To avoid this, simply pay your bill on time.
Most people will use their credit cards responsibly and won’t damage their credit report. Doing this will show lenders that you are responsible, and that they can trust you with loans and credit – which in turn will raise your credit score. Keep in mind however; if you have a lot of open accounts (credit cards), it may tell lenders that you won’t be able to pay them back. Lenders look at several open accounts as being potentially damaging to your credit report, even though you may be paying the credit card back under the lenders terms.
Although you may be tempted to have more than one credit card, it can actually be a downfall in the eyes of the lender. Most lenders will see this as you having a way to spend your entire limit, and will fear that you may do so. Even though you may not have this intention, credit card lenders will almost always fear the worst case scenario. Eventually this can lead to you damaging your credit score – simply because a lender will turn you down for a future credit or loan. Remember every time you apply for a credit card or a loan this gets recorded on the credit report whether the credit card or loan is granted on not.
Something else you need to keep in mind is the fact that it can be really easy to miss a payment on your credit cards. Although this doesn’t sound bad, it can have a very negative impact on your credit report. If you start missing payments, or paying them late; the lender will eventually enter it in your credit report. This can have a negative impact, lowering your beacon score and eventually bringing down your overall credit rating. As well as increase your interest rate on your credits cards.