When it comes to using credit cards to build a more positive credit score or simply improve a low credit rating, consumers at the current time are reportedly working hard to pay down credit card debts, but there are always other areas of debt like personal loans or car loans, that can create financial distress in the lives of consumers, as many consumers here in the month of September have faced various challenges in their financial lives. Yet, for those who may have been successful at paying down debts but are now in a position where building a higher credit score and improving their bad credit rating is a priority, many have often used credit cards as a way to build a more positive credit history over time but there are some financial advisers who caution against only using this particular route for bad credit repair.
As an example, an individual’s FICO score is often made up of a variety of factors, one of which being the types of credit that are available to a particular consumer. Yet, the amount of debt the consumer has in relation to the available amount of credit in their lives also can impact a consumer’s credit score, so if a consumer is only using one credit card to make purchases throughout the month but pay off what they owe each time their bill comes due, there have been arguments made that this can work against certain consumers, as they may be running up a high balance on their credit card as a result.
This is where some consumers may make the mistake of trying to open multiple lines of credit, taking out loans they may not need, or in some cases consumers may even carry a balance on their card, but since a consumer’s financial position will be different from one to another, there have been questions as to how cardholders may be able to overcome these problems when improving their bad credit score is their main goal.
Obviously, working on keeping one’s debts low will always be beneficial, so if a consumer owes a substantial amount on student loans, for example, and continues to use their credit card to charge expenses monthly and promptly pay them off, this could lead to periods during the month where it may be seen that a consumer has a high amount of debt in relation to the amount of credit available in their lives and could be a step in the wrong direction for those focused on improving a bad credit score. Yet, consumers have often been told that making credit card charges and showing that a consumer can handle debt responsibly will be vital to the bad credit repair process, but some counselors often advise consumers to make sure they keep their charges low, as only using a small percentage of a consumer’s available line of credit may be more helpful when it comes to building a credit score.
While the route that the consumer takes to build their credit rating will depend on their personal situation and will ultimately be a choice only they can make, keeping debts and charges low, paying bills on time, and even consulting a reputable credit counseling agency are all steps that consumers have taken in the past that have helped them achieve a more positive credit score not only in the short-term but for years after they have repaired their credit as well.