Timing Is Everything

When trying to maximize your credit score there are a lot of theories of how you should treat your credit cards.  Some say never use them, some say keep a balance, some say use them up and start paying them down slowly over time.

The first thing to remember about managing your credit portfolio, is that you don’t have to have debt to have credit.  The two largest components of your credit score rests in your payment history and the balances on your revolving debt.

Payment History constitutes 35% of your score.  This is a measure of how consistently you’re paying on time.  If you have collection accounts and charge offs, this will lower the point value you get in this category.  Make sure whatever debts you do have, you make the payment on time.

Revolving Debt Balances dictate the second largest component of your credit score. Keep the balances on your cards below 30% of the limit.  If they go higher, your scores to drop by as much as 30%.  There is nothing that says to have good credit you must pay interest.  You just have to keep the balances low and the payments on time.

Should you have a really stellar rewards card and you want to maximize the points, go ahead and max out the card for your everyday living expenses (In other words, do not finance long term purchases.), and then pay off the card with each cycle.  By doing so you avoid the interest.  But there is a catch.  If you are going to utilize more than 30% of your limit in any given month you must “clock” your payment.  Make sure that you contact the credit card company and ask them when they report the balance to the credit reporting agencies.  If they report BEFORE the payment date, even though you pay it off in full, you will appear maxed out and the score will suffer.  You need to make sure the payment is processed BEFORE they report your balance to keep the score high.

For other tips on managing your credit, check us out, at www.DeltaCreditRestoration.com

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