Does Getting a Credit Card Lowers My Credit Score?

Some people might think getting a credit card will hurt their credit score, but that isn't true. In fact, it's quite the opposite. If you are responsible with your cards and make sure to pay off your bill every month , having a credit card can help improve your credit score.

With most factors of your credit score being calculated based on how well you pay your bills, it's important that you show financial responsibility by paying for any expenses each month.

The only way that having a credit card can potentially hurt your credit score is if you carry a balance on the card. Carrying a balance means you aren't making monthly payments, which could start to look like an inability to handle your money when it comes time for creditors to review your score.

While having a credit card can be beneficial, you must remember that any financial decisions should be made with the well-being of your budget in mind.

Remembering that you need to pay off your bills can help keep yourself from racking up more debt than you can handle.

1. "Some people might think getting a credit card will hurt their credit score, but that isn't true."

The speaker wishes to communicate that people incorrectly believe getting a credit card lowers their credit score, but they are incorrect. The tone is formal and factual.

2. "With most factors of your credit score being calculated based on how well you pay your bills, it's important that you show financial responsibility by paying for any expenses each month."

The speaker wishes to communicate the idea that the only way having a credit card can hurt one's credit score is if they carry a balance. The tone is formal and informational.

3. "Remembering that you need to pay off your bills can help keep yourself from racking up more debt than you can handle."

While credit cards can be beneficial, one must remember their financial decisions should be made with the well-being of their budget in mind. The tone is formal and informational.

10 benefits of high credit card score

There are various benefits that comes with having a high credit card score and some of those benefits includes:

1. Lower Insurance Premiums

Insurance companies regard people with higher credit scores as less risky to insure compared to those who have lower scores. So, it is likely that you'll pay lower insurance premiums as your score rises.

2. Access To Higher Loan Qualifications

People with higher credit scores will find it easier to access loans and qualify for lower interest rates.

3. You Can Negotiate Better Deals

Favorable terms are usually extended only to people with good credit so being able to negotiate better deals is one of the benefits of having a high score. For instance, you could get discounts on the purchase price or even lower interest rates and this is available to those with good scores.

4. Better Job Opportunities

Companies tend to prefer employing people who have higher credit scores compared to those who have lower scores as they make for more trustworthy employees. This means you can get better job opportunities if your score is high.

5. Higher Chance Of Being Approved For Credit

Having a high score means you're likely to get approved for credit when applying.

6. More Opportunities To Borrow Money

People with good scores will have lots of options available when it comes time to borrow money for whatever reason. This is because companies are willing to lend at favorable terms to those who don't default on payments.

7. Higher Chance Of Getting Competitive Loans

Similarly, people with good scores are more likely to get the best rates when it comes time for them to borrow money as companies tend to compete for such customers. This means you'll pay lower interest rates and this is one of the benefits associated with having a high score.

8. Your Payment History Is Preserved

Another benefit of having good credit is that your payment history is preserved and won't be blemished, which means you'll always maintain a clean record and this remains true even when financial hardships strike and payments become due.

9. Better Chances Of Being Approved For A Credit Card

One of the benefits associated with having a high score is that you have better chances of being approved for a new credit card. This means access to more credit cards and this means having greater convenience when it comes time to pay.

10. Lowered Risk Of Defaulting On A Loan

With people who have good scores being considered less risky, they are more likely to get favorable terms when it comes time for them to borrow money. This is usually the case with debt consolidation, mortgages and also car loans.

How to score higher?

There are various ways you can score higher and some of those include:

1. Pay Off Bills As Soon As Possible

The earlier you pay off your bills, the better it is for your future borrowing capacity as this serves to positively improve your credit score. So, make sure you settle debts as soon as possible, but never take up additional debts in order to do so.

2. Pay Bills On Time

You should also make sure you pay your bills on time as this serves to positively impact your credit score and the impact is usually greater compared to paying off debt early. Just ensure that you set up automatic payments for things like electricity and other monthly bills, if possible.

3. Establish A Good History Of Credit

You'll also be able to establish a good history of credit if you make sure that all monthly payments are made on time. This is because this serves to positively impact your score and it lasts for seven years or more before expiring. You could even get offers for low interest rates when the positive impact is still active.

4. Don't Close Old Credit Cards

When you close old credit cards, it looks like you're not very responsible and this means your score will get lowered. So, if you want to maintain a good score, ensure that all your monthly payments are made on time every time and don't close old accounts with balances.

5. Open More Accounts

Opening more accounts does not mean you have to get multiple credit cards when in fact, it's much better if you can control your spending so that you don't have to rely heavily on credit cards.