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Having excellent credit has never been more important than it is right now. Credit history is used to decide applications for apartment rentals, home mortgages, car loans and new credit cards. It even can be used to set insurance rates and be checked as part of a pre-employment background check.

Because it’s so important to have a great credit history, credit card users want to know if their credit card is actually hurting their credit. The truth is that your credit card may be helping or hurting your credit, depending on how it is used.

Your Credit Cards Are Hurting Your Credit If …

You use it to rack up debt. Many credit card users consider their line of credit to be another form of funds at their disposal. By accumulating considerable debt, these cardholders are raising their debt-to-available credit ratio, which can hurt their credit. If credit card holders can’t manage their spending, they may be better off without credit cards.

You can’t make all of your payments on time. Managing your credit card accounts is not a huge burden, but cardholders do need to keep track of their statements and always pay each bill on time. Cardholders who pay late will not only incur costly late fees and interest charges, but they can hurt their credit as well. Even worse is when cardholders miss payments altogether. The longer a bill has been unpaid, the worse it is for your credit. Credit card users who are having trouble managing all of their bills should reduce the number of cards they use, or consider not using credit cards for a while.

You apply for lots of new credit cards all of the time. The credit card industry loves to attract new customers by offering valuable sign-up bonuses in the form of points, miles and cash back. Some are tempted to apply for many credit cards in order to earn as much rewards as possible. The downside is that when too many credit card applications are made within a short period of time, this can hurt your credit score. The scoring models see these new applications as a possible indication that you could be in financial trouble, and your score will suffer a small, but significant amount. Thankfully, the drop is temporary and minor compared to the damage caused by carrying too much debt and missing payments.

Your Credit Cards Are Helping Your Credit If …

You keep your debt under control. Just having a credit card will help your credit history, unless you use it to get into too much debt. If you never carry a balance, or if you keep your debt to a small fraction of your total credit extended (ideally 10% or less), you won’t have any problems.

You have multiple credit cards. Having several credit cards will increase your overall available credit and, if you use them responsibly, you can use them to keep a low debt-to-available credit ratio over time. This will benefit your credit score.

You always pay your bills on-time. Everyone seems to offer their own special tips and tricks to improve your credit, so it can be easy to miss the biggest factors that make up your credit score. Paying your bills on-time should always be your first priority as it has the most effect on your credit score. Having credit cards means that you have bills to pay, and their timely payment will always reflect well on your credit.

If you want to get a better idea of how your credit cards are affecting your credit, you can use the free tools from Credit.com that give you two of your credit scores, updated every 14 days, along with a breakdown of what factors in your credit history are influencing them. If you see that your credit cards are actually hurting your credit scores, you can then take the necessary steps to turn your credit around.

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