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Are you an US citizen? Planning to settle down there? Yes? then it's for you. And if you are from our generation then I can bet you use credit cards for most of your purchases. Credit Card usage quietly hit our credit scores, no matter, where in the world you are and it's not different in US. So, here are a few handy tips to keep a check on your credit card usage and maintain a good score when in US.*If you are like most, your early twenties taught you a few life lessons about using credit cards. We’ve all been there, you use your card to live slightly above your means, and then you are stuck paying high interest rates for years to follow. 20% interest is a hearty price to pay for a few nights at the bar with your buddies. But sometimes life lessons come at a cost.
Good credit is crucial. And, if you don’t have good credit, you will become trapped in a viscous cycle of borrowing money at high interest rates just to keep your head above water. So, it’s wise to make protecting your credit score a priority. Here are 5 ways to keep that credit score in a healthy range.
Your Credit Card Balance Should be Low
If you find yourself needing to pay a loan, you might be scrambling to get one big chunk of money. Whether you live in laid back Denver or the hustling city of New York, your credit score will follow you everywhere you go. What you need to know about credit is that higher credit card balance makes your credit score worse. As a rule of thumb, the balance should be less than 30% of your limit to keep a good credit score. For example, if you have a $1,000 limit you should have less than $300 on your card. Card issuers report the balance and if it's high, your credit score will be affected even if you always pay your balance in full.
Keep Your Old Credit Cards Open
When you close your credit card, the issuer stops sending updates to the credit bureaus and they place less weight on accounts. After ten years, they will remove your history from your credit card report. If you lose your history, you will lose your credit score and make an average credit age shorter.
Limit Your Applications for Credit
Each time you apply for a new credit (it doesn't matter for a loan or a credit card) your credit score takes a hit. These hits are often less than 10%, but if you have a huge score, you can lose a lot of points (if your score is 800, you will lose 80 points). Opening a new account also lowers your credit age (approximately 15% of your credit score). In order to keep a good score, you might open new credits sparingly.
Beat Impulse of Buying
If you love shopping with your impulse-happy friends, it can be very easy to let them convince you that everything looks great on you and you should totally buy all the outfits you just tried. If you want to beat impulse shopping, do it with people with frugal spending habits (and if they can also tell you which dress out of many other dresses looks great on you, that's even better).
Give Yourself a Splurge Budget
Women are much less likely to buy something they don't need if they allow themselves a smaller spending budget. Whether it's planning for one new item a month, giving yourself cash that you can spend or allowing a fancy coffee several times a month, allow yourself some room so that you don't feel like you have a strict limit.
Put simply, the more you know about your credit score, the easier it will be to keep a good one. Check your credit report several times a year. Sometimes, there can be mistakes that you can quickly correct and maintain a good score.
*This post may contain affiliate links, products sent by brand/PR for consideration, paid contents.