Did you know that 90% of credit score is affected by how responsible you are with your credit cards? If you don't have a credit card your credit score is also being negatively impacted. Have a credit card is 30% of your credit score which is 165 points. If you do not have a credit card you are missing the chance to potentially gain those points.
How Does Having A Credit Card Impact My Credit Score
Having a credit card helps you to build positive payment history. Building payment history is the most important part of your credit score. It is actually 35% of your credit score, which is the heaviest weighted category used when calculating your credit scores.
If you have collection accounts or charge-off accounts, more than likely the furnisher is reporting negative payment history monthly. If that is the case you want to try and outweigh the negative payment history by adding positive payment history monthly. You can do that by opening a secured credit card.
Having a credit card and handling it responsibly is 30% of your credit score, which is 165 points. In order to receive points out of this category you have to have a credit card opened and your balance has to be 30% or less than your credit limit.
For example, if your credit card limit is $200 do not put more $60 dollars on the card. $60 is your safety net, but if you want to get the most points try leaving around $10 dollars on the card monthly.
Having a credit card will also help your credit mix. Credit mix counts for around 88 points. Credit mix is also just what it says, a mix of credit. Your credit profile should be made up of different type of accounts, such as credit cards, installment accounts, retail accounts, auto loans, etc. It shows potential lenders that you know how to handle different types of credit and that you are responsible.
Having a credit card can also help build credit age which is 10% of your credit score. Over time your credit age will begin to grow and show lenders that you are not a risk, that you actually pay your accounts off in time.
How having a credit card affects 90% of your credit score.
Having a credit card helps to build positive payment history, which is 35% of your credit score.
Handling your credit card responsibly and keep your balances low is 30% of your credit score.
Having a credit card will also help your credit mix, which is 15% of your credit score.
Having a credit card will also help you to build credit age, which is 10% of your credit score.
That is how having a credit card can positively affect 90% of your credit score. All of those categories previously listed all add up to 90% of your total credit score.
Having a credit card is essential. If you have a family member or friend that can add you as an authorized used to one of their cards it will help you help to begin the process of obtaining your own credit card.
If you do not have someone that can add you as an authorized user that is perfectly fine. Start with a secured credit. You will be very happy with such a large payoff for such a small investment.