Credit Card Credit Score

Your credit score varies based on the information reported about your financial transactions and other information the consumer credit reporting companies collect about you each month. Knowing what factors the credit bureaus use to determine your credit score can give you the tools to improve your scores. Credit bureaus weigh these five factors:

• Payment history (Pay on time?)
• Length of time accounts were open
• How much of the credit line you use
• Your mix of credit accounts
• How many accounts you opened recently

See All About Your FICO Score and Understanding Your Credit Score to learn the relative importance of each of these factors.

If you do not care about your credit score because you will not be needing a loan, renting an apartment, or buying a house in the next few years, then use the card with the lowest interest rate.

However, if you have any inkling that you may need to borrow funds in the near future or attain an new credit card, then spend the bit more in interest and use the higher limit card.

Here is my rationale:

1) How much do you owe lenders compared to the total amount you can borrow impacts about 30% of your credit score. If your credit cards are close to being maxed out, it may indicate looming financial problems and a possibility of default and it drops your credit score.

2) Keep your borrowing well below your credit limits, because your FICO credit score will be lower if you are maxed-out on your credit cards. Even if you just pay off the minimum balance, the effect on your credit score will be minimal if not nonexistent.

Thus, by using the high interest, higher limit card, you are not indicating any distress in your financial situation. If you max-out your lower interest card, to save a few dollars in charges over a couple of months, then you risk the chance of negatively impacting your credit score.

Bottom line? If you expect to pay-off the amount in two months, then you should avoid the potential damage to your credit score.

I hope this information helps you Find. Learn & Save.

Best,

Bill

www.bills.com/