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Want to improve credit score? You could actually just by following this instructions.
Maybe you want to improve credit score that’s why you are here, First step to your better financial journey, So not to pile up debt for next month to be paid. Or, May be you fall into an “anti-credit card” category who loathes the potential of paying interest. Or It’s just case that your debit card is at the front of your wallet and, by default, gets swiped every time. any thing could be possible, in this lazy world anyway 😉
Whatever the reason be, If you’re solely relied on your debit card and rarely used your credit card or doesn’t use it at all, you might get surprised how it impact your credit score. Specially when you avoiding it in order to saving for a down payment for a home. We asked financial expert about what happen if credit card is kept ideal and one does not simply use it at all after having it from financial institution. Here is what they have to say. and its shocking, Really!
Worst thing that could happen if you don’t use your credit card?
First let’s get this clear, If you are not using your credit card then your bank who issued the credit card to you might cancel it due to inactivity. and weird thing is your credit card company will not disclose the card closing policy. So basically its simply not possible for you to know at what exact inactive time period your credit card get canceled. May be its 3 months, 6 months, A Year. Who knows!, To know, May be you need to gamble on your credit card until you loss it, just kidding – obviously not recommended!
If your credit card got cancelled due to inactivity it could impact your credit score negatively. As established credit make up to 15% of your credit score, Credit score get better with time just like old wine which got better and rare as passing age. The length accounts have been open as well as how long since those accounts have been used both factor into your score, according to FICO, a widely-used scoring model.
Don't waste your time. Get a loan online.
An absolute worst case scenario of not using a credit card
Fraudulent activity occurs on your card and you overlook it. Though you are not using your credit card, you should regularly keep track of your credit card statement and make sure if there is any unrecognized spending there or not. That entry might be fraudulent activity.
How does only using your debit card affect your credit?
Frankly speaking, when you want to build your credit score, using debit card makes no sense, as you are simply not taking any finance from anyone and not repaying actually, you are just using what you have in your bank account. Just accept it when you really want to build your credit score debit card is nod doing any favor to you. though it look like your plastic credit card but both things are completely different.
If you’re not using your credit card to make any purchases or pay any bills, it will still appear on your credit report
Maintaining on-time, every time payments is the best thing you can do for your credit score, If you are not using your credit card at all actually you are losing the opportunity to show lenders that you can effectively repay your bills.
There is one perk of not using your credit card frequently, though, Having a low or zero balance on a credit card can affect your credit positively as it will help to lower your credit utilization ratio
The rule of 30 in finance is very well said that when it comes to credit usage, It makes 30% of your FICO score and you should keep your credit utilization below 30%.
What is the responsible way to use credit card?
Even if you’re carrying low or no balances, it’s important to still use your credit card every once in awhile. You can immediately pay off the balances in full, Those can be small purchases such as groceries or gas. Try doing so once a month. This way, You wont get your account closed due to inactivity and are prove that you can pay your debts timely.
summarize, what’s the out come of all this information. we can understand your debit card is very important part of your life style yet think of your underutilized/unused credit card as potential player seating ideal on bench eager to get in the game and score some (Credit) points for you!
What are you waiting for, Now you know the fact, improve credit score, Let your the player score the goal.
