Will using credit cards hurt my credit score?
There is a common misconception that using credit cards hurts your credit score. If used responsibly (paying bills on time, paying in full each month, never carrying a balance), credit cards can actually help your credit score. If used irresponsibly (not paying off bills on time, maxing out credit lines) credit cards can hurt your credit score. It all comes down to how you manage your credit.
To see the impact of using credit cards on your credit score, it is important that you understand how your credit score is calculated. The two parts that have the most impact, both positively and negatively, are your payment history and credit utilization.
Payment history, as the name implies, is a record of whether or not you are paying your bills on time. Keep in mind that this is not only credit card bills. Payment history includes all lines of credit: auto loans, home loans, student loans, medical bills, utilities.
Credit utilization is a calculation of available credit to credit used. Suppose you have 1 credit card with a $10,000 limit and you spend $1,000. Your credit utilization is 10%. If you add another card with an additional $10,000 limit, but you are still spending $1,000, your credit utilization has dropped to 5%. Which is a good thing! The lower the credit utilization, the better. It is best practice to keep your credit utilization 30% or lower. This means never carrying a balance on your credit cards.
On average, RewardStock employees have 10-12 cards open and 800+ credit scores.