Although using credit cards wisely is a great way to build your credit, there is such a thing as too many credit cards–especially if they are maxed out with high monthly payments. Sometimes, speaking with qualified credit companies to fix your credit can help in situations like this.
No Credit Versus Bad Credit
In some ways, a person with no credit can be worse than a person with bad credit. Giving a person with no credit a loan or a credit card is a complete roll of the dice, and there may be high-interest rates involved. Within a few months of responsible use, however, the tables quickly turn, and the borrower will begin to add positive points to their credit score.
Those with bad credit may be completely barred from financial services or they may be forced to pay a large deposit by signing up for a secured credit card.
People with good credit do not face any of these hurdles, and are typically approved for credit cards and smaller loans without income verification or other time-consuming paperwork.
When Are Credit Cards a Good Thing?
Let’s use the example of a person with a $10,000 limit. This month, their car needs a major repair for $2,000. Having that credit card handy is very convenient for situations like this. Now that their balance is $2,000, they will be required to make a monthly minimum payment. If they are smart, they will pay as much as they can towards the card each month.
So long as the bills are paid on time, the credit card company is going to report to America’s three credit reporting bureaus: Equifax, Experian, and TransUnion. Each month, they’ll report how much you owe, what your payment is, and whether or not you pay your bills on time.
As long as all the lights are green according to some proprietary formulas the credit reporting bureaus use, your credit score should rise every month. Those who don’t pay their bills for long periods, however, may be taken to court and have their wages garnished by credit card companies.
Good Credit Cards Gone Bad
If you have one or two credit cards and an auto or home loan, applying for a new credit card should be perfectly fine. It should be noted that even if you are not approved, there will be a notice on your credit report that someone has recently accessed it. It is this notice that people are concerned about.
If a person gets rejected for a credit card and then starts applying for every credit card offer they see, there will be multiple instances of their credit report being accessed. This person is seen as a high-risk individual, as banks can see that no new cards have been opened, yet there have been numerous applications that were all denied; this drives down the person’s credit score.
For this reason, if you apply for one or two credit cards and are rejected, you shouldn’t continue applying.
Moving Forward
If you are repeatedly denied in your applications for credit cards, the best course of action is to call a credit repair company like The Phenix Group.
Our financial and legal professionals will help you navigate the murky world of credit reports and advise you on best practices to help increase your score. We can also work to find inaccuracies and have them removed from your report. Before you know it, your credit score will start to rise, and your loans will be approved quickly and with lower interest rates.
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