Some Common Trends about Credit
There are some various trends about credit scores, which most people follow blindly. However, these trends are more often than not detrimental to your credit score, and cause more harm than good. Listed below are some of the mistakes that people make, thinking that it will increase their scores, when in reality it does the opposite.
Maxing Out Your Credit Card Each Month
Most people believe that if they max out their credit cards and then repay it every month, it shows that they have the amount to repay credit. However, such rapid fluctuations in your credit score are often a cause of worry, and overall, tend to decrease your score even more. The best way to keep your score upgraded, and your money with you, is by only using up to 30% of credit each month.
Unnecessary High Limits
Most people increase their credit cards to its maximum limits, as they want to show that they are capable of repaying back their loans. However, this plan easily backfires, as lenders can see right through this idea. Additionally, you may be having a credit card stashed for emergencies of any kind. This credit card may not have had any use so far. This too, does not bear a good impression, as lenders want to see a credit report with some history, and not merely a blank slate.
Additionally, the best way to prepare for an emergency of any kind is not by keeping a credit card, but by opening a savings account of your own, and adding money every month.