When you're trying to maintain a strong credit score, or rebuild credit that has been damaged in the past, one of the accounts that can either help you considerably or hold you back the most is your credit card.
These accounts often play a huge role in consumers' credit scores simply because of the way in which they're used. Whereas with auto loans or mortgages, among other accounts, you will know exactly what you have to pay every month, there is no such guarantee with credit cards for most people. For this reason, it's important to make sure you're doing all you can to ensure that you are managing these accounts properly, as not doing so will likely lead to significant negative consequences.
For example, one of the biggest mistakes most people make with their credit cards comes when they only pay the minimum listed on their bills every month. This is a problem not just for their finances, because it kicks the can of your potentially significant debt down the road, rather than actually addressing it, but it also hurts their scores by keeping what is known as their "credit utilization ratio" rather high. This factor, which makes up 30 percent of your score, is based on the percentage of your available limits you're using at any one time. If that number exceeds 30 percent, your ratings will start to diminish, so making larger payments, which cut into your balances more quickly and don't let your debt grow as much, is often vital in this regard.
Moreover, when people are struggling with their credit card obligations, they may also think they can get away with missing a payment or two, but this will also have a massive negative impact on their scores. Payment history — that is, how often you make all your payments on time and in full — makes up 35 percent of your score, so if you miss one deadline, in some cases even by a single day, you may see your scores fall by 100 points or more, and consequently undo months or even years of hard work.
When you're concerned about your credit standing, you may also want to consider ordering copies of your credit reports. Checking these documents closely for any unfair markings which can drag down your score may allow you to get back on the right track. Often, working with a credit repair law firm may help to more quickly resolve the matter.