How Do Charge Cards Affect Your Credit Score?

Using a charge card can provide you with a number of benefits as a consumer. Many people wonder whether using a charge card will affect their credit scores. Here are the basics of the impact of a charge card on a credit score.

High Balances

With a credit card, having a high balance on your card can significantly impact your credit score. However, with a charge card, this is not the case. When a lender is evaluating your debt ratio, they will not use charge card balances in the equation.

Payment History

Even though the card balance does not negatively affect your credit score, the payment history could. Credit bureaus are going to pay attention to whether you make your monthly payment on time. When calculating your credit score, timely payments are one of the most important factors involved. As much as 35 percent of your credit score can be affected by making your payment on time. 

Even if you are only 30 days late on a charge card payment, the charge card company will report this to the credit bureaus. This is going to show up as a red flag on your credit report, and it will remain there for a sustained period of time.



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