Each time you allow a company to review your credit, this is a ding and has an effect on your score. The question we often get is when should this be worth the hit. Here are some suggested cases when it’s ok.

• To establish a payment history. When you’ve paid off all your debt, it’s time to have some record of a payment history. Without an ongoing payment history your score will fade.
• To increase your available credit. An increase in your credit line will give you a better credit utilization ratio. The ideal ratio is 30%. If you are using more than 30% of your available credit, your score will suffer. One way to lower your utilization is to have higher credit lines. But beware, if you push your debt higher, you’ll defeat the purpose and just dig a deeper hole.
• If you’re starting a business, credit cards are the easiest ways to access needed capital. This assumes that you have a solid plan for repayment and business plan.
• If you need to diversify your credit profile, as in the case of only having a car loan, adding a credit card can benefit you.
• To get a better credit card. Perhaps you started out and have a high interest rate such as 25% or more, once you’ve established credit, you qualify for a rate of 12%. Transfer the balance but don’t rack up more on the 25%. Don’t close it either. Closing cards can have a negative effect.

Smart credit card and credit management require attention to the details and numbers. PLUS, your discipline is essential. Reducing credit card debt is one of the best ways to save significant money above and beyond putting money in the bank.