Credit Cards and Business

In business one of the most important things is having good credit. Here are three of the major mistakes people make when using credit cards.

Closing Cards Out - If you close a credit card account it will appear to the FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account make sure it is a more recent account and absolutely necessary.

DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS - This is the fastest way to bring your score down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at all times. If you decide to pay down balances, do it across the board. Meaning, make an extra payment on all of your cards at the same time.

DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS - It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates.

If you do have to make any changes to your credit cards make sure that you do not foresee any major purchases coming up like vehicles, houses, or business equipment within the next several months.