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Back to the ABC of credit history

People like to discuss things they don’t have enough knowledge of. Credit history is one of the sub­jects that gave rise to numerous miscon­ceptions and false impressions. Let’s shed a light on this often misunderstood subject.

But first, a valuable piece of advice: before opening a new credit card, read carefully the small print that specifies the terms of its use. Such terms are usually a part of any offer for opening a credit card. I can assure you that you will find a lot of useful information there.

For your information: Bank has the right to limit the owner’s use of the credit card only if the owner fails to comply with the agreement he signed when opening a card. Here are the most common obliga­tions that are often violated:

  1. To pay the card balance on time and make sure that your payment is received by the bank in due time.
  2. To pay no less than the minimum amount (including past due amount) specified in the statement.
  3. Not to exceed the credit card limit.
  4. To use the rewards in strict accor­dance with the instructions and upon approval by the customer service officer at the bank.
  5. To keep your credit score at the same level as at the time of the card opening. Have your credit score checked by a specialist twice a year.

Now back to misconceptions.

Misconception #1: Only 30% of your credit card limit can be used. For exam­ple, if your credit limit is $ 9K, you are not supposed to exceed $ 3K. Wrong. Credit bureaus track only the percentage of all your credit cards use. Each credit card is not checked separately provided you comply with the terms of your agree­ment with the bank.

Misconception #2: If you stop using your credit card, it will be terminated. Wrong. In your bank agreement there is no requirement for you to use the card. Your card can be terminated only if there are problems with your credit or in case your card has been or may have been lost or stolen. My advice is to use the card at least once in six months.

Misconception #3: Only a new card has rewards and 0% APR. Wrong. These perks are the result of your credit history status at the moment. Just follow the guidelines for keeping your credit history stable and in good standing.

Misconception #4: In order to have an excellent credit score, it is necessary to use your credit cards regularly. Wrong again. The key factor in determining your credit score and credit history is the ratio of your credit use to how fast you pay off the debt. So, the ideal situation is the full pay off, zero balance on your card. Strange as it may seem, but people who use their cards sporadically or don’t use them at all, usually have the best credit score.

Misconception #5: Number of credit cards should be limited. Wrong. There are different budgets and different needs. From what has been said previ­ously, you must have realized that there is no point in limiting the number of credit cards. On the contrary, the bigger the credit, the bigger the possibilities.

I have touched only the top of the ‘credit card iceberg’. There is more to come. Your questions are always welcome.

joseph RozenbergPlease call me for more information: 847-520-7030.
email: mockbajr@gmail.com
site: www.drfgroup.net

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