{"id":5070,"date":"2021-07-20T13:19:34","date_gmt":"2021-07-20T19:19:34","guid":{"rendered":"https:\/\/www.dncu.com\/?p=5070"},"modified":"2024-10-25T14:27:18","modified_gmt":"2024-10-25T20:27:18","slug":"10-tips-to-improve-your-credit-by-using-credit-cards","status":"publish","type":"post","link":"https:\/\/www.dncu.com\/es\/blog\/10-tips-to-improve-your-credit-by-using-credit-cards\/","title":{"rendered":"10 Tips to Improve Your Credit by Using Credit Cards"},"content":{"rendered":"

Are you wondering how to boost your credit score?<\/p>\n

Whether you\u2019re getting ready to apply for a new loan or working to rebuild your credit after a period of financial hardship, this article will cover everything you need to know about credit cards and credit score.<\/p>\n

Have questions or need help choosing between credit union credit cards in New Mexico? Call us at 505-455-5228 or (877) 818-3628 toll-free.<\/p>\n

How are Credit Scores Calculated?<\/h2>\n

The FICO\u00ae Score model is perhaps the most well-known, but VantageScore is another credit score model. Whichever credit score model you\u2019re looking at, the factors used to calculate credit scores are pretty similar among the different models. Here\u2019s what to pay attention to when trying to improve your credit score:<\/p>\n

Total Credit Usage (30% of your score)<\/h2>\n

Just because you have it doesn\u2019t mean you should use it\u2014especially if you regularly carry a balance on your credit card(s). To improve your credit score, keep your revolving balance below 30% of your total credit limit. For example, if your credit limit is $1,000, your balance should never exceed $300.<\/p>\n

If you have more than one credit card, you\u2019ll want to keep each card\u2019s balance below 30% as well as keeping your total credit card balances below 30% of your total credit limit. For example, if you have three cards and one has a zero balance, the second is utilizing 10% of the credit limit, and the third is nearly maxed out at the limit, your credit score will still suffer from the maxed-out card.<\/p>\n

Finally, keep in mind that opening a new credit card will increase your total credit limit, potentially decreasing your total credit utilization rate if you carry a balance on other cards. Inversely, closing a credit card account will lower your total credit limit and could hurt your credit score. If you\u2019re trying to stop using one of your credit cards, it\u2019s better to cut up the card and leave the account open, unused, than to close it and risk lowering your credit score.<\/p>\n

\"Improving<\/p>\n

On-Time Payment Record (35%)<\/strong><\/p>\n

This factor is one of the most straightforward and easy to control. Simply pay your bills on time every month and you\u2019ll maintain a positive payment history that will boost your credit score. With your credit card accounts, make at least the minimum monthly payment by the due date. If you experience financial hardship and can\u2019t make one or more of your bill payments on time, contact your lenders and utility providers right away to see if they can work something out with you that won\u2019t hurt your credit score.<\/p>\n

Length of Credit History (15%)<\/strong><\/p>\n

This one isn\u2019t as much in your control since, the younger you are, the shorter your credit history is going to be. However, the one thing you can do in this category to improve your credit score is to keep your accounts open, especially the oldest ones. Some credit accounts, such as a student loan, will automatically close when paid off. But that first credit card you got at 18, 20, or so? Keep that open even if you don\u2019t use it anymore. Maybe charge one small purchase on it each month just to keep it open\u2014the older your accounts, the more of a boost you\u2019ll get to your credit score from this factor.<\/p>\n

Credit Mix (10%)<\/strong><\/p>\n

Having different types of credit accounts will also help your credit score, as it demonstrates your ability to manage different loans<\/a> and credit card accounts. For example, credit cards, auto loans, and home mortgages<\/a> represent a nice mix of credit accounts. If you don\u2019t have a credit card account yet, consider applying for one<\/a> to diversify your credit mix.<\/p>\n

New Credit Inquiries (10%)<\/strong><\/p>\n

While there are times when applying for a new credit account can improve your score, you don\u2019t want to apply for too many accounts in a short period of time. And sometimes, as when going through the mortgage application process, you should stop applying for new accounts entirely.<\/p>\n

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What Are the Credit Score Ranges?<\/h3>\n

Now that you understand the factors that make up your three-digit credit score, let\u2019s look at the five ranges your credit score can fall into:<\/p>\n