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How credit card habits can affect our credit scores

The perils of plastic!

Not the kind we find on California beaches nowadays, but the kind you can find in your wallet. As possible home shoppers we should always be aware of our credit and how credit card habits can affect our credit scores. Which lenders use when reviewing mortgage applications.

Almost everyone takes credit cards these days and it is always so easy to buy it now and pay for it later. But be careful. Although you can buy almost anything with a card there are some things you should not.

1. Taxes: Not only does the IRS charge a 2% fee to use a credit card but do you really want to pay interest on taxes owed?  Instead try to work out a payment plan directly with the IRS.

2.  Mortgage payments: Most banks won’t accept payment by credit card but there are 3rd party companies that will happily charge you a large fee to make this happen.

3. School Tuition: Instead get a lower interest student loan.

4. Stocks, Bonds, and other investments: Most likely the interest you pay on your credit card will be much larger than the return on the investment and the investments come with inherent risks.

All in all, it is a good rule of thumb to never put any items on credit that you would not pay off in the same month.  Obviously that is easier said than done in this ever more expensive world. If you at least stop to think about alternative ways to pay for items before purchase you might end up in a much better position both financially and on your credit report.

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