We all *feel* a way about credit cards and credit scores. But do we actually *understand* credit cards and credit scores? Good question. Listen and learn.
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So when it comes to credit and credit cards:
- Don’t let the credit card companies win. If you’re not going to be able to pay off your statement balance each month, the fancy travel rewards aren’t worth it.
- There’s no exact formula to how your credit score is calculated. But we know it’s impacted by 6 things: the age of your credit, your utilization rate, your payment history, derogatory marks, the number of accounts that you have, and the number of hard inquiries on your score.
- Remember, credit cards can be used to your advantage to help you build your credit. It’s another type of credit, it can add a higher limit to your utilization rate and it can add to your credit score as well.
Here are three tips to help you become a master of credit:
- Keep your credit score healthy. Don’t close older credit cards, having them open helps the age of your credit score.
- Don’t miss minimum payments on your credit cards or loans, that’s the biggest detriment to your score.
- The Schumer box is the mandatory credit card disclosure brochure that will tell you exactly what interest rate you’re going to be paying on the balance. Always find the Schumer box on your credit card applications before singing.
Time is the best remedy for fixing past mistakes on your credit report. Your derogatory marks will fade, your age will get mature and those hard inquiries will drop.You don’t need a perfect 850 credit score. So don’t get too obsessed with your credit score. Your score matters with big things like getting a mortgage, you’ll have access to the lowest interest rates with at least a “Great” score, that’s in quotes, of around 760. So hang in there.