Most adults have at least one credit card in their name and many don’t leave home without their plastic. But while some individuals pull out credit cards in an emergency or when they need reward points, they might not have considered using credit cards for repairing credit.
Whether you need to build credit or repair your credit, credit cards can jump start your efforts. But these small plastic cards aren’t only for purchases. Credit cards can have a direct impact on your credit score. This is because your creditors report your credit activity to the three credit bureaus. Good habits can raise a low credit score and open the door to better credit offers in the future
If your credit score is less than stellar, here are three ways to repair your credit with credit cards.
1. Use your credit cards on a regular basis.
Some people tuck their credit cards away and never use them. This is the perfect solution if you’re trying to minimize your debt and avoid unnecessary bills. But if you want to use credit cards for credit repair, you have to use your credit accounts. Not to say that you should go on a shopping spree. Rather, use your credit cards for small purchases here and there. This keeps your account active.
2. Pay your credit card bills on time.
Paying your credit card bills late is the kiss of death. Quite the opposite, you can easily repair your score by consistently paying your bills on time. Remember, your credit card company will report your activity on a monthly basis. Develop a habit of skipping your payment and you can cause further damage to your score. If you have a problem with timely payments, don’t wait until your due date to submit your payment. Pay your bill a few days or a week after a transaction occurs. This ensures that your payment always reaches your creditor on time. This is one way to guarantee a positive credit report update.
3. Pay off your balance in full.
Do you want to add points to your credit score? Pay off your credit cards in full and you will give your credit score a needed boost. The amount you owe your credit card company makes up 30% of your credit score. A high balance lowers your score and makes it difficult for you to get new credit. Gather all your credit card statements and total your balances. Develop a plan to pay this debt in 6 to 12 months, if possible. For example, if you owe $5,000 in credit card debt, check your finances to see if you can pay $500 a month. Cut out shopping, dining out and vacations, and you may find the extra income to pay off your bills. There’s also the option of looking for a second job and using the income from this job to eliminate your credit card balances.
This article was first published on http://moneyprime.com.