CREDIT CARD UTILIZATION GUIDELINES

Stephen W. Gangey, Founder

Stephen W. Gangey, SME
Credit Improvement Specialist

Everyone of my clients are surprised when I inform them about revolving credit concerns.

  1. You should have between 2 and 5 major credit cards (Visa, M/C, Discover, AMEX etc.).
  2. As a habit, they should be used at least once per quarter to keep them active.  They can be closed due to inactivity.  It does not matter who closes them, it will negatively affect your score, because you lose the time on the account.
  3. The balance on the account the day after the Statement Closing Date is the number reported to the credit bureau for that billing period.  It may take a couple of weeks to show up on your report, but that is where the number comes from.
  4. If the balance on the Credit Report is more than 30% of the credit limit it will negatively affect your credit score.  A nearly maxed out account can cost you 85 points on your credit score.
  5. A “Late” reported on any account is akin to shooting yourself in the foot.  Just one “Late” has a cost of 85-points for the first year.  After a year the cost drops to 45-points for the second year.  After the second year it will no longer affect your credit score.

To find out other tips to improve your financial well being sign up for our Profile Review Program for only $115 (discounted for Veterans, Teachers & Law Enforcement), or review the other articles in this Blog.

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