Home Buyer Tip | Get Rich Slowly

 Twitter |  Facebook |  digg it |   delicious |   StumbleUpon |   LinkedIn |  reddit 

According to a report from Experian, one in seven Americans maintains at least 10 credit cards – while the average is five. Usage on credit cards has dropped dramatically in the last two years as financially constrained consumers have reduced spending and begun paying off debt. (IndexCreditCards.com, a credit card comparison website, also released a report on how average credit card debt has dropped to $3,752 from $4,013 in their last report from July 2009.) Writing in this weeks USA Today, Sandra Block says that more and more consumers are saying “no” to credit cards

Here are some critical tips for managing your credit cards in order to maximize your credit profile:

1. Use your credit cards regularly, but in small amounts, never exceeding 30% of your entire credit line. For example, if your card limit is $4,000, set a self-imposed limit to keep your balance at $1,200.
2. 
   Even if you pay your bills on time, coming close to your full balance each month affects your credit score negatively. Regularly maxing out your card limit is a bad habit in the eyes of credit-rating firms. It’s better to spread your credit charges out over two or three cards, keeping each balance at or below 30% of your total credit line.
3. 
   Don’t get rid of old cards even if they have higher interest rates than ones you may get on newer cards. Credit rating firms like to see a well-established history, so utilize your old cards every so often for small purchases.
4. 
   On the flip side, avoid getting new cards, if possible. When you add a new credit card, your credit score will likely suffer a temporary drop until you have established a payment history with that card.

Well-managed credit cards will assist you in establishing a stronger credit profile and better credit scores that can potentially lead to lower interest rates and terms when applying for home loans. For more information on shoring up your credit profile, feel free to email or call us directly.

Feel free to pass this important article along to your friends, colleagues and family. We can all use some guidance in managing our credit in today’s economic environment.