Credit cards have become an integral part of our life. Now and then, you find yourself making payments with the help of credit cards. Though it seems easy, you must know about mistakes that you might be making unintentionally. Being unaware of some facts about your credit cards will make you vulnerable in case you are borrowing from banks.
You don’t know your credit score
Most people usually don’t know about their credit scores. It is a crucial factor which is checked when you apply for any loan. Having a good credit score will help to reduce chance of rejection by the bank. It’s better to have a high credit score while applying for a high volume loan like home loans. You can know your credit score from the bank or you can also check it online.
Hoarder of credit cards
If you choose to carry too many credit cards and you are incapable of handling them all, it will have a negative impression on the banks. It’s better to keep less credit cards and to maintain their use to have a high credit score.
Making late payments
People often make their payments after due dates. It not only creates a sense of irresponsibility but it will also lead to higher interest rates. This habit is truly not recommended; better in the long term that you make your payments on time. If you are unable to pay on time, you may choose ‘auto pay’ option if possible so at the end of every month you don’t end up with a mess in your hands.
Closing cards
It isn’t a good option to close cards; instead you can try to use them well. Your utilization rate plays an important part in determining your credit score. It’s not like not spending money will help you increase the score but a healthy combo of earning and spending will surely get you a good one. Better you work on this instead of following the ritual of closing and opening new card once in a while.
Exceeding credit limit
Of course, you will not like to pay more interest than required. Exceeding your credit limit will make banks charge you a higher interest. Charge will be in addition to the interest you are currently paying. To maintain a healthy credit score over time, it is also recommended to spend money keeping in mind to have a good amount in your credit card which contributes about 30% to your credit score.