Since your credit scores can have a huge affect on your life – from interest rates for home loans to approval for renting an apartment – it’s a great idea to understand how your credit report works.
Here is a great video from The Credit Learning Center. It’s almost 5 minutes long, but very worth watching!
Did you know that revolving debt (credit cards) can effect your credit score up to 100 points. For every 1% of you’re revolving debt limit you use, you loose 1 point.
Example: You have 5 credit cards with $1,000 limits on each (total of $5,000 in credit). Now, you go shopping and put a $500 balance on 2 cards. Since you spent $1000 you spent 20% of your limits so your score will go down 20 points. This is why it is good to have 4-6 credit cards with good limit so when you use one from time to time you are using a low percentage or your limits. Always remember, it’s good for your credit to have credit cards, it’s just bad to keep high balances on them.