The credit score that you have is a mirror of how you handle your debts responsibly, and the most significant factors are credit card payments. No matter if it is an American Express, Visa, or any other card, just by the manner in which you carry out your payments, your credit health can go uphill or downhill.
Payment History is the Most Important
Payment history is the biggest factor of your credit report which is 35% of your credit score. By timely payments of your credit card bills your score gets better gradually. However, if you are late with your payment even once, there will be a negative impact on your credit report for a long time.
Tip: You can be sure you will never forget a due date by setting reminders or turning on AutoPay.
Credit Utilization Ratio
Paying on time is the major aspect, but the second most important factor is the credit utilization ratio, which is a comparison of your balance and credit limit. Specialists recommend that the usage should be under 30%. So with a credit limit of $5,000 on your Amex, it is advisable that the balance on your card should not exceed $1,500.
Paying More Than the Minimum
When you just make the minimum payment your account will remain active, however, you will be charged more interest and your utilization will be high. It is a good practice to pay the entire statement balance if you want to stay out of debt and maintain your score.
Consistency Builds Trust
Both lenders and credit bureaus have faith in consistency. In case you are a person who is always on time with credit card payments and who also keeps balances at a low level, it indicates that you are financially disciplined. Gradually, through this consistency, the scores will increase and better credit offers will become available to you.
Missed Payments Affect Your Credit Score More Than You Imagine
Just a few days delay in your payment can result in you encountering some late fees. However, if the payment is 30 days or more overdue, not only will it be reported to credit bureaus, but your credit score can also be decreased substantially. Over time, regular late payments can even make financial institutions decide to reduce your credit limit.