10 Common Credit Card Questions Answered by the Gurus

Estimated read time: 2 minutes

There are literally millions of questions when it comes to credit cards — and you need yours answered by the experts!

How is my credit score calculated?

According to the FICO Score model, your credit score is calculated from five main factors. Each factor contributes towards your overall score. Payment history attributes to 35% of your credit score, followed closely by 30% for the amount you owe. Other contributors include 15% for length of credit history, 10% for new credit, and 10% for credit mix. The best way to increase your credit score is to make your payments on time consistently.

How many credit cards should I have?

Although financial gurus have different opinions on this matter, it is recommended to have at least one to two credit cards. Credit cards have the unique advantage of contributing to your credit score unlike cash or debit.

Are my credit card purchases safe?

Unlike debit cards, many credit cards have the added protection of warranties, disputing charges, and more flexibility when it comes to replacing a lost or stolen card.

How can I repair my credit score?

The best way to repair your credit score is to build good credit. Start by opening a secured credit card, which generally require a deposit starting around $200. Next, ask a close family member with good credit to add you as an authorized user which allows you to benefit from their good standing.

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APR
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Deposit
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How can I get a better interest rate?

Interest rates can fluctuate based on your credit history. If you are applying for a new card, find the "terms and conditions" and review any interest rates. If you want to lower your current rate, start with the credit card with the longest history of on time payments and ask if your interest rate can be lowered.

Should I carry a balance?

Aim to pay your credit card balance in full each month since higher balances contribute to a lower credit score. By paying the full balance, you can avoid additional fees.

Should I close my credit card?

Since credit history contributes to 15% of your credit score, closing a credit account can actually hurt more than help. Try to keep your account open and keep a small balance to show some credit card activity.

How long does bad credit last?

Bad credit lasts about seven years on your credit report. Thankfully, by building up good credit, creditors may be more understanding of previous circumstances.

How do I check my credit report?

You can check your report for free annually from the three main credit reporting agencies online or by visiting AnnualCreditReport.com.

Should I transfer my balance?

Before you transfer your balance, make sure to read the fine print for an increase in APR after the promotional period. For the most part, try to avoid promotional balance transfer cards.