 TITLE: How Credit Cards Work CONTENT: How Do Credit Cards Affect Your Credit Score?\n---------------------------------------------\nCredit cards affect your credit score significantly, though it's up to you to make sure they're doing so in a positive way. Your payment history is the single most important factor in your credit score, and thus making all your payments on time can improve your score over time. Making late payments, or missing them altogether, can hurt your score. Here are a few other ways credit cards can affect your credit score:\n*   **Credit utilization ratio**: This measures how much of your available credit you're currently using and is the second biggest factor in your credit score. Carrying a balance on a credit card that brings it close to its limit can be a red flag to lenders, and reflect negatively in your credit scores. Find a card's utilization ratio by dividing its balance by its limit and converting to a percentage by multiplying by 100. Credit scoring models consider credit utilization on a per-card as well as a total basis. A ratio above 30% can start to harm your scores, but the lower, the better.\n*   **Hard inquiries**: Whenever you apply for a new form of credit, such as a credit card, something called a hard inquiry is added to your credit report. These tend to hurt credit scores, but their impact shouldn't be huge or long-lasting. Many hard inquiries over a short span of time, however, can start to drag down your credit scores more significantly.\n*   **Credit mix**: Credit scoring models also consider your experience with diverse forms of borrowing. Having a mix of installment loans and revolving credit accounts in your name can make a positive impact on your scores, but it's not wise to take on new debt solely to address this factor.\n*   **Age of accounts**: The more experienced you are with borrowing, the more it can benefit your credit score. If you open a credit card account and use it wisely over several years, that longevity can help your credit score rise. END