Friday, October 23, 2009

Manage your credit cards effectively

Maintain the ratio of the credit card balance to the maximum balance

The second most important component of your credit score is your credit limit and the ratio of the balance. The credit bureau will compare the outstanding balance that you owe on each of your card and the maximum amount of debt that you may taken on that particular card. The lower will be the utilization rate; the higher will be your credit score. Try to distribute the balance evenly on your cards so that the credit bureaus find it favorable and thereby positively impact your credit score.

The number of cards that you’re maintaining is also important 

The credit bureaus prefer that a credit holder should not hold any more than 4-5 active credit cards. How many do you have? If you’re holding 12 credit cards together, you may at a loss. No matter how much you try to reduce the number from 12 to 5, the credit bureau may reward you for the reduction in number but may penalize you at the same time for the increase in the utilization. Apart from the above mentioned points, there might be some other reasons too due to which you may see a reduction in your credit score but when it comes to credit card usage, these are the most important ones. Try your best to manage your credit card effectively so that this doesn’t affect your credit score in the long run.

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Author's Bio: 

Stewart Bradley is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. Though he holds his expertise in the payday loan consolidation and has made significant contribution through his various articles, he has interest in budgeting, mortgage, insurance, short term loans, bankruptcy, credit advice and more.

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