If you pay less than your minimum, will it count as one missed payment? Do you need to avoid having a high credit limit? Know the facts about credit cards from licensed money lender Singapore so you can make smarter choices soon.
A new Card Will Affect Your Credit Even if you Don’t Use It
You might have heard other people telling you that it is only when you use a new credit card that it will affect your credit score. However, whenever you apply for new credit, it will comprise 10% of your credit score. It does not matter if you have your application approved for the card or if you use it. It is the inquiry that counts. Frequently applying for a new credit card can affect your credit score. As such, make sure that you need that new card before you apply for it.
Carrying A Balance Is Not Needed To Build A Credit History
Credit cards from Easy Credit are great tools for you to build your credit history. Remember that you don’t need to have an unpaid balance to do so. The best strategy that you can try is to use your credit cards and pay the bill that you have in full for each month. This is an effective strategy to keep your overall debt-to-credit limit ratio low.
If You Only Pay Your Balance, Your Card Is Not Paid Off
You might accrue interest even if you have reduced your balance to zero. This is known as residual interest. It is because of the gap between the date that you are billed and the date that you made your payment. To avoid this thing to happen, make sure that you call your card issuer. Then, request a calculation of the exact amount you owe on the date you expect your check to arrive. Then, pay that amount.
Having a High Credit Card Limit Is A Good Thing
If you manage your credit cards wisely, then you can have a high credit limit which can work unto your advantage. Thirty percent of your credit score is dependent on your debt-to-credit ratio. This refers to the amount you owe in proportion to your total credit limit.
If you have a high credit limit but you keep your balances low, then your debt-to-credit ratio is low too. Thus, this can help you with your credit score.
Having More Credit Cards Is Not Always Good
Indeed, having more credit cards is not always better. 10% of your credit score is determined by the kind of credit that you have. For example, you may have credit cards, student loans, and mortgage loans. Credit companies and licensed money lender Singapore always look for a good mix. If all you have are credit cards, then this might not help build your credit score.
Paying Less Than The Minimum is Considered as a Missed Payment
If you don’t pay the total minimum payment on your credit card bill, your credit card company will tag it as a missed payment. With this, it can lower down your credit score. Then, it will be more difficult for you to qualify for credit in the future.
As such, be sure to check your statement at Easy Credit to determine the minimum amount due. It is important to pay the due on time. Remember, when you pay more than the minimum amount due, it is a great way to pay your debt. Until you pay it off, the company will continue to charge you with interest every month.
Your Balance Have Many Interest Rate
Your account might include balances with various interest rates. For example, one rate for a cash advance and one rate for a balance transfer. This points you to another good reason that you have to pay more than what is the minimum due. When you do so, your card issuer will have to apply any amount above the minimum balance with the highest rate. This can help you reduce the higher-rate debt fast and help you save more money.
Your Card Expires But Your Account Will Not
The card expiration has two main purposes. First, a physical credit card can only last for three to four years’ worth of dipping and swiping. With an expiration date, it will provide your issuer with a date on where to send you a new card before the old one will fall apart.
Second, the expiration will provide a small measure of identity theft protection for the cardholders. This will be a piece of information that only you can have if you have the card with you.
The majority of the credit card companies will send you a new card before your old one expire. If they fail to do so and you use the card that is past its expiration date, then it will be declined. However, your account should still be valid and you just have to ask your card issuer for a new card.