Use of revolving credit is a key factor in maintaining a good credit score. If you have no revolving tradelines (credit cards) then your score can fluctuate wildly.

Many people have credit cards which they don’t use. A rule of thumb is that a credit card which shows “activity” (usage) is better for your credit. Also, if a credit card goes a long period of time without usage then the credit provider may close the account, which can be very damaging to your credit scores.

How much use is useful? Well if you are going to try to get approved for something then it is best to keep your balances below 30% of their credit limit. When balances increase past this point your credit scores will drop dramatically. If you “max out” your credit cards then you can find that your scores drop 100 points or more. All too often we see people who get into financial problems, the use credit cards, only to find themselves unable to get a consolidation loan due to “credit crippling” themselves. This type of behavior often leads to bankruptcy.

Another useful habit is to use credit cards for purchases each month and then to pay it off in full. This strategy makes the likelihood of getting approved for a higher balance greater. The higher your available balances the better your credit scores. Just be careful not to get in over your head. Proper usage of your credit cards is crucial to maintaining a low-debt, high credit score life.