How Credit Cards Affect Your Credit Score

credit score concept on the screen of computer

If you use credit cards the right way, they can keep your credit score in good shape and ensure that future credit opportunities come your way. What’s the right way to use credit cards? We’ve got the information you need to know.

  • What is a good credit score? The FICO score is the score most creditors look at when they’re determining a borrower’s creditworthiness. The FICO credit score range goes from 300 to 850. Building a good credit score will help you obtain credit, whether you need to buy a car, finance a home, or pay for an emergency expense.
  • Why should you apply for credit cards? While paying for things in cash may seem like a responsible way to manage your money, the truth is that if you don’t have open, active accounts, you won’t have a credit score. Because it’s relatively easy to be approved for credit cards, they can be a good way to establish and build your credit history.
  • How many cards should you have? There’s no perfect number of credit cards to have, but it needs to be a number you can successfully manage. The best credit cards are those with low interest, but it can be difficult to qualify for a low-interest card if your credit score is not strong. Every time you apply for credit, it factors into your score. When you put in several credit applications in a short period of time, your credit score can take a hit. On the other hand, having more than one card can help you keep your balances low.
  • Watch the amount of credit you use. Maxing out your cards is bad for your credit. Maintaining a credit card balance that’s only 30 percent of your available credit is recommended, and ideally, the balances should be paid off completely every month. Only charge what can be paid down quickly, and never use credit cards to purchase luxury items you can’t afford.
  • The age of your accounts matters. Keeping accounts for a long time, and paying them on time each month, shows that you’re a reliable borrower. It also helps your score to have a mix of credit, because lenders like to see that you can handle different types of loans: installment loans, such as auto loans, verses credit cards.

If you have questions about building your credit or you’re looking for home financing, First Coast Mortgage Funding is here to help. Committed to helping people in the First Coast region buy and refinance residential properties, we specialize in every kind of property, from single-family homes to condominiums, townhouses, and manufactured homes. Over 70 years of combined experience has made us independent mortgage experts, and we offer creative solutions to help borrowers overcome roadblocks when trying to secure a loan. Our goal is to provide home loans to our clients at the lowest interest rates and the best possible service. Contact us through our website or call 904.770.5000 for more information.