Credit cards can build or destroy your credit score. This depends heavily on your credit utilization🤔. This means, how much money you use in relation to what is available to you on your credit card (your credit limit) 🤑. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
So, let's say you have £1000 available on your credit card. This is your credit limit. If you typically spend 60% of this per month then your credit utilization is 60%. The magic number for your credit score to go higher is maintaining a credit utilization of 30%👀. This means you spend no more than 30% of your available credit per month. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
If you constantly use more than 30% of your credit limit, it is very likely your score will remain the same🙈 or go down😱. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
Credit bureaus might also take into account how often you use your credit card. 10 times, 20 times or 50 times a month? ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀Over utilization of your credit card will increase the likelihood of your credit score remaining the same or going down.
Whilst paying back your monthly minimum payment on time, every month and avoiding reaching your credit card limit often will see your score going upwards and your credit card provider offering you an increased credit limit.