Twenty-five-year old Bill Griffen of Greensboro, N.C., says paying one credit card bill is a whole lot better than paying six. He downsized the plastic in his wallet, hoping to improve his sagging credit rating.
“They always give you great deals to open them up,” Griffen says, “especially now in the holiday season.”
But credit experts will tell you a sudden rush of new lines of credit can make you look like a bigger risk.
Amid this season's dizzying array of credit card promotions and reward programs, along with deals offered by stores peddling their own cards, many of the 165 million Americans with credit cards are also learning these days it takes more than paying your bills on time to earn a good credit score — which increasingly is being scrutinized by more than traditional lenders.
“Your credit is more important than ever,” says credit expert Gerri Detweiler, author of “The Ultimate Credit Handbook.” “It may determine not only what you pay for loans,” she says, “but also what you pay for auto insurance, homeowner’s insurance, whether you get the cell phone plan you want, even if you get the job that you hope to get.”
Experts say the best advice for upping your score: Check your credit report for accuracy.
Other tips may surprise you, like:
- Use your credit cards occasionally, because a lack of activity could count against you.
- Don't close your old credit accounts; your history could help you.
- Don't open new, multiple accounts, which could lower your score.
“And even if you pay your bills on time,” Detweiler says, “other credit issuers may be monitoring your credit score and, if it goes down, they may raise your rate.”
In that light, you may want to reconsider applying for new cards this year. The few bucks you could save buying that holiday gift might cost you thousands of dollars down the road, should your credit score go down.