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Through the proper use of a credit or charge card, a borrower can raise his credit score. Keeping the credit card balance less than 30 percent of the limit helps keep the score high by showing proper credit utilization. Additionally, paying the debt on time and keeping the card open for a long time improve your credit score over the life of the card.
As soon as a borrower opens up a new line of credit, his score is decreased for a few months due to the fact that a lender checked his report and the fact that he has a new debt listed. Late payments, high account balances, and charged off balances can also negatively impact the borrower's credit score.
Any debt listed on the credit report affects a borrower's credit score, regardless of the type. This includes charge cards. With proper usage, the charge card can help to increase a borrower's credit score. However, if the charge card is used irresponsibly, it can cause the borrower's credit score to decrease rapidly. Continued positive usage will cause the borrower's credit score to remain high and vary very little.
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