Credit Scores and Credit Cards Cards
ADVERTISER DISCLOSURE

There are various ways you can leverage the business relationships between the airlines and the banks to great terrific travel opportunities.

The key to it is to get the most out of your credit card rewards and this is something that anybody can do.

Firstly however we must talk initially about credit scores. Credit cards if used wisely can provide some fantastic opportunities, but the math only works if used strategically.

If for some reason you cannot pay your credit cards in full each and every month stop the credit card spending. You definitely should not be looking at funding travel with credit card points.

The reason for this is it just does not make sense to pay a high interest rate like 15% in order to get 1%-5% back on travel.

We must now discuss credit scores. Contrary to popular belief applying for a credit card doesn’t all ways negatively impact the credit score.

In reality credit scores are made up of the following components.

35% of the score is payment history

30% of score is derived from credit utilization

15% of the score is derived from credit history

10% of the score is made up of the types of credit you use

10% of your score is derived from your request for new credit.

10% of your score is derived from your request for new credit.

So every time you apply for a credit card you get hit with an inquiry, which falls into the category dealing with new credit. The result is your score will temporarily drop 2 or 3 points which will then fall off in two years.

However the other categories which your score is made up of can improve as a result of applying for a credit card. The result of this is that your credit score can actually go up as a result of applying for more cards.

The key is to keep your credit utilization low and make sure that your make your payments on time, as long as you are disciplined in this you should not see a negative impact on your credit score as a result of applying for cards.

One thing you could do is get a copy of your free an annual credit report(link to https://www.annualcreditreport.com/index.action) and check and make sure everything is correct and up to date.

There are other free services available like Credit Sesame. Once you enter your personal details you will get your credit score, along with your credit utilization ratio, and your debt to income ratio.

If your credit score is about 720 you should be able to get approved for credit cards very easily which are suitable for your intended purpose.

For most people a few credit cards should be enough to have a substantial impact on they way they travel.