We put so much emphasis on credit being important that few think of it as a game. However, being strategic about managing your credit is paramount and can feel like a sport at times. Numerous people are surprised to find out that they could be actually damaging their credit by paying their credit cards off each month. Few people are aware but your credit score can actually be hurting if your total credit utilization rate is above 30 percent. Fortunately, there are ways you can use credit utilization to your advantage.
Keep Track of How Much You are Charging
Not keeping track of your spending is the easiest way to overspend. If you are nearing 30 percent of your credit utilization rate on one card, then it is time for you to switch to another one. Try to keep the credit utilization rate below 30 percent on every card.
Set Up a Balance Alert
You can sign up to get a balance alert via email or text. You can set the alert to let you know when your credit utilization rate reaches 20 percent. This way, you can avoid any surprises and start planning ahead.
Raise Your Credit Limit
If you are approaching 30 percent, you can decrease your credit utilization rate by raising your limit. Keep in mind that your credit score will be checked when you request a limit increase. Your credit score may go down a few points, but it will be worth it in the long run. Many creditors will also raise your credit limit of they see that you are making timely payments regularly.
Find Out When the Credit Card Company Reports Payments
Most credit card companies report payments and balance activity every month, but may not report this information the same time that the bill is due. That is why your credit report may say that you owe more than you actually do. You will need to ask your credit card company when they report information to the credit bureaus.
If all of these tips seem hard to follow, then you may want to pay your bill twice a month instead of once a month. By splitting the payments in half, you can lower your overall credit utilization rate. This will decrease the possibility of you missing a payment as getting paid (if you’re on a bi-weekly pay schedule) becomes synonymous with paying down debt.
Managing credit card can be difficult but it is not impossible. However, if you are currently being sued by a creditor or debt collector, it is too late to resume payments and doing so may even hurt you more than it helps. Illinois credit card debt attorney Heather Benveniste with Benveniste Law Offices can step in and and serve as your legal ally. Through strategic negotiations and proven-effective debt relief methods, she can help settle on a debt payment plan that favors you. Contact us today for a free case evaluation.