Illyrianna

2 Contributions 216 People Helped

Member Since: November 2013

Most Helpful Contribution

Will opening a credit card raise your score?

Sep 27, 2014
Many Factors
Helpful to 187 out of 215 people

As ractsrd said, opening a new card will boost your available credit, which means money owed on other cards will average lower (for example, 30% utilizsation on one card becomes 15% utilization between two cards (if they have the same limit). It's also important to keep in mind the age of credit history, which ractsrd also mentioned. Opening a new card now will help your score down the road, since your average will increase with time, but opening a new card now will lower your current average age of accounts... so in our earlier example if you had a card open for 2 years, adding a new one would bring the average down to 1 year. You will typically want your average to be more than 8 years and you would want to achieve that as soon as possible.

And yes, to continually boost your score, you need to actually use the card. Somewhere between 1% and 20% of your total balance should be considered your card's "budget" -- use your credit card like a debit card to rack up rewards points and pay it off each month before the interest comes out with money from your checking account that you would have spent on those purchases anyway. Your credit score will skyrocket and you'll have tons of cash-back-rewards or frequent-flyer-miles, etc. depending on the rewards your credit card offers. The key is to remember that a credit card is a loan, not free money. Every cent has to be paid back and keeping a balance for longer periods of time will cost you money in interest.

One rule of thumb I always follow when consiering a card is a monthly or annual fee. If it has a fee I won't touch it. If there is no fee, then the interest rate is obsolete, since the method I mentioned (paying it off before the interest is due) makes the interest rate irrelevant, since you'll have a zero balance when the interest comes due. If the card has a monthly/annual fee then you have to pay it anyway, whether you have a balance on your account or not.

Activity (2 Total Contributions)

How to get my credit score to increase?

Sep 27, 2014
It does take some time
Helpful to 29 out of 31 people

A credit score is about proving you can handle debt responsibly, so using the cards responsibly and keeping your balance low (between 1% and 20%) will help your score, but it does take time to prove that you can manage your cards because a new card has no information that can be used to calculate that data.

Your age of credit lines (how long you've had accounts open) is also a factor, which means that having new cards is not as good as managing old ones well. The ideal term seems to be over 8 years. Over time that should fix itself, though. Also, if you applied for the cards directly, rather than responding to a pre-approved offer, etc. then you will also have a hard inquiry on your credit report for each application. Hard inquiries hurt your credit score.

To really increase your score, you will need to actually use the card. So as I mentioned, somewhere between 1% and 20% of your total balance should be considered your card's "budget" -- use your credit card like a debit card to rack up rewards points and pay it off each month before the interest comes out with money from your checking account that you would have spent on those purchases anyway. Your credit score will skyrocket and you'll have tons of cash-back-rewards or frequent-flyer-miles, etc. depending on the rewards your credit card offers. The key is to remember that a credit card is a loan, not free money. Every cent has to be paid back and keeping a balance for longer periods of time will cost you money in interest.

Will opening a credit card raise your score?

Sep 27, 2014
Many Factors
Helpful to 187 out of 215 people

As ractsrd said, opening a new card will boost your available credit, which means money owed on other cards will average lower (for example, 30% utilizsation on one card becomes 15% utilization between two cards (if they have the same limit). It's also important to keep in mind the age of credit history, which ractsrd also mentioned. Opening a new card now will help your score down the road, since your average will increase with time, but opening a new card now will lower your current average age of accounts... so in our earlier example if you had a card open for 2 years, adding a new one would bring the average down to 1 year. You will typically want your average to be more than 8 years and you would want to achieve that as soon as possible.

And yes, to continually boost your score, you need to actually use the card. Somewhere between 1% and 20% of your total balance should be considered your card's "budget" -- use your credit card like a debit card to rack up rewards points and pay it off each month before the interest comes out with money from your checking account that you would have spent on those purchases anyway. Your credit score will skyrocket and you'll have tons of cash-back-rewards or frequent-flyer-miles, etc. depending on the rewards your credit card offers. The key is to remember that a credit card is a loan, not free money. Every cent has to be paid back and keeping a balance for longer periods of time will cost you money in interest.

One rule of thumb I always follow when consiering a card is a monthly or annual fee. If it has a fee I won't touch it. If there is no fee, then the interest rate is obsolete, since the method I mentioned (paying it off before the interest is due) makes the interest rate irrelevant, since you'll have a zero balance when the interest comes due. If the card has a monthly/annual fee then you have to pay it anyway, whether you have a balance on your account or not.