You are here: Home > Improve Credit > Improving Bad Credit

Improve Bad Credit By Adding New Credit Cards

If you want to improve bad credit, you should understand how using credit cards can help you. Many people mistakenly assume that the best way to abandon credit problems is to get rid of the credit cards. To the contrary, using credit cards appropriately is quite often a sure path to improve credit.

Credit Repair and Credit Improvement

Although credit repair and credit improvement are closely related terms in the industry, there is a difference. While the general focus of credit repair is cleaning up credit reports by correcting inaccurate or incomplete information, credit improvement is a comprehensive process that includes paying down debt and negotiating debt-settlements, managing your existing credit and establishing new credit. Credit repair and credit improvement work hand in hand to help you achieve what really matters: having good credit.

How Credit Cards Work For You

Perhaps you’re wary of using credit cards because they’ve caused you some problems in the past. But understanding how appropriate credit card use can improve bad credit gives you leverage in the overall process of raising your credit score.

Here are some ways to put credit cards to work for you:

Having the proper number of cards—Having too many credit cards gives lenders the impression that you may be stretched-thin with other debts. Not having enough credit cards is somewhat ineffective in establishing a solid credit history. Having between 3 and 5 cards is recommended as optimum to help you achieve the highest credit rating possible.

Managing your balance-to-limit ratio—How much you’re charging each month has an impact on your credit score. Spending too much, again, gives the impression that you’re going out on a limb with debt and you may be considered a risk to lenders. It’s recommended that you never charge more than 30% of your balance on any one of your credit cards.

Paying on time—Of course, paying your bills on time is vital to your credit score. Every late-pay is recorded on your credit report, and creditors will surely consider your history of promptness when rating you for a loan or service. Be sure to always make at least a minimum payment to each credit card on time every month.

Making sufficient payments—You may have heard that leaving a small balance on your credit cards each month is a good way to manage your revolving credit. Another theory, however, according to nationally recognized credit expert John Ulzheimer, is to pay off your balances completely every month. Although there doesn’t seem to be an exact formula for having perfect credit, paying off your balances each month appears to have the most positive effect on your credit score.

The Value of Credit Cards

Although every credit report is unique, the standards used by credit bureaus to determine your credit-worthiness are universal. Whether your credit is good or bad, using credit cards responsibly and strategically will undoubtedly have a positive impact on your credit rating. Likewise, the misuse of credit cards will inevitably result in damage to your profile—even the most solid credit reports will suffer as a result of credit card mismanagement.

Your credit report is a reflection of your good sense, your reliability, and your integrity—and credit cards are the tools you need to project the positive, responsible image lenders like to see. That’s why every decision you make with your credit cards plays a role in how successful you are financially. From now on, don’t let charge cards ruin your credit—use them to build it.

Repair My Credit Now