Using or exceeding your credit limit on your credit cards
Be cautious about how high of a balance you're racking up on your cards. Even if you have the cash to pay your cards off, using the full balance will hurt your credit utilization. If you frequently find yourself in this situation, you can request a limit increase from your card issuer. If you're at the top of your limit and you don't pay your cards off each month, it's time to work on your budget to bring your balance down and find other ways to pay your bills.
You don't want to be charged the high interest from your credit card month to month on your bills. If you want to know more about budgeting, and where to cut back, read more about the essential steps to building a budget here.
A lot more goes into your credit score, but these are some easily fixable issues that will make a big impact on your credit score. If you want to know more about the basics of credit scores and how they work, check out our blog, which breaks down the basics of credit scores here.
Basic credit terminology to know
Credit Score: A numerical reflection of your creditworthiness based on your payment history, credit utilization, credit age, recent inquiries, and credit mix. This number is used to determine whether you qualify for loans, credit cards, and more. The higher your score is, the better.
Credit Card Statement Balance: Your statement balance is your credit card balance at the end of your credit card's billing period. When your billing period ends, this balance is what you owe on the card, and what you need to pay to avoid paying interest on your balance.
Credit Card Minimum Payment: In addition to your minimum balance, your credit card company will allow you to make a smaller payment to keep your account in good standing. Your remaining balance will carry over to the next month and you will be charged interest on that balance.
Credit Card Total Balance: This is the balance on your card at any given time. This may deviate from your statement balance on your statement because sometimes there can be a gap between when your billing period ends and your statement is generated, causing a difference in balances if you've made purchases in that time.
Credit Card Credit Limit: The maximum amount of credit you have available on your credit card, or a line of credit.
Available Credit: The amount of your credit limit you haven't spent.
Credit Utilization: Part of how credit bureaus measure your creditworthiness, which measures how much of your available credit is being used.
Payment History: Part of how your credit score is measured, which looks at up to 10 years of your payment history, collections, repossessions, charge offs, and bankruptcies.
Credit Age: The average age of your credit accounts, another factor that affects your credit score.
Credit Inquiries: When your credit is pulled by a lender, which affects your credit score.
Credit Mix: A way to describe your diversity of credit accounts. A good mix of credit lines and installment accounts helps your credit score.
by: holli casto
