1. How many credit cards should you have?
There are different opinions different people have as to this query – some individuals advise to have none and some have up to 20 accounts they actively use. The answer is somewhere in the middle of the road: you’d better have two – a card with low interest rate to be used in the emergency cases and the one granting you rewards. Reward cards attract many people, but they have higher interest rates.
2. Should I carry a balance?
No, you shouldn’t!
Until you face emergency or some important purchase, you should cover the credit card interests. The wide spread belief that carrying a balance is good for your credit score is just a myth and actually no balances boost your score.
3. What is a credit score and how is it formed?
Lots of people admit they do not really understand what their score is and how it’s calculated. The FICO score is the one most influencing your ability to get credit, it ranges from 300 to 850 and allows the companies decide how you deal with your credit. The better score you have, the more trustworthy you are and the better credit terms are offered to you.
The main factors which influence your rating are payment history (35%), the amount of debt (15%), credit history duration (15%), new credit (10%), types of loans used (10%).
4. How often should the credit score be checked?
It’s better to check your score regularly, you can get minimum 3 free credit reports a year, so use the opportunity. Some companies, as well as banks, now also provide the credit report within customer’s monthly statement.
5. Do I pay off the card with higher interest or a higher balance first?
Experts often have most argument as to this question, smallest balances are quickly paid off, but covering the high-interest debt will save you more money.
6. Whether to co-sign a loan for a friend or family member?
In case the borrower fails to make payments, you will be hooked for the balance, besides, even your perfect credit will be damaged if he makes late payments. Even if you trust your friend or a family member, nobody is insured from poor money decisions and you will have to assume the debt is yours if he fails to cover it. You may advise Internet loans from Personal Money Service to those of your friends who badly need money.
7. When should a child get the first credit card?
The first credit card should come with the real job and certain savings in the possession. A young man should have his own money and learn to save first, the knowledge of spending is easier to acquire, especially with the borrowed money.
8. Is it necessary to close the account on a not used credit card?
In case you want to have a proper credit score, keep the accounts open.
9. Is it ever smart to pay an annual fee?
In most cases the answer is negative, though only careful calculation can show what is best for you at present. Plenty of fee free credit cards may serve you good, but in case you are a frequent user, a card with a fee may have sense. A sky club membership, for instance, may be purchased with a good discount, when needed, for the card rewards, and then a fee does not matter much, as the card pays off. While deciding on an annual fee take only the rewards you really need and use into consideration.
10. Can a new credit card help to rebuild a good credit score?
There are two sides to this question. If you really manage to use the card responsibly, fill the application out, but if you lack self-discipline, it’s better to look for some other ways not to get into a deeper trouble.