The Truth About Credit Scores and Travel Rewards Cards

Busting the Credit Score Myth

One of the biggest worries and concerns I hear from parents is: “Won’t opening a credit card hurt my credit score?”

You are not alone in wondering this question because I was there too! This blog will walk you through how credit score works, how opening credit cards affects your credit, how to keep your credit score high, and look into why these myths exist.

The truth is, when used responsibly, travel rewards credit cards can actually help your credit score over time.

How Credit Scores Work (Simple Breakdown for Parents)

Your credit is broken down into a few areas:

• Payment History (35%)
  • Always pay your bills on time
  • When paying off the full balance every month, this helps your score jump
  • The largest percentage that makes up your credit score
• Credit utilization (30%)
  • How much available credit are you using
  • You use your credit card to pay for bills and pay it off in full every month, boosting your credit utilization
• Length of credit history (15%)
  • The longer you have a certain credit card, the more of a ding you will see in this area
  • I like to leave one of my personal no-annual-fee credit cards open to help this percentage jump.
  • The longer you have credit, the better
• New Credit (10%)
  • Applying for new credit cards does take a small dip in your credit score
  • A small percentage of what makes your credit
• Credit Mix (10%)
  • Variety of credit
  • Examples: mortgages, car loans, credit cards, student loans

1. Always pay your credit in full every month-Set auto pay just to make sure you are always okay
2. Space out applications– The safe window is 90 days between card applications which in your Travel Freely app it will keep track of this for you and let you know when your 90 day window is up.
3. Alternate with Player 2– If you and your player 2 alternate opening cards this will also give your credit a rest and help you keep those scores high
4. Use cards only for budgeted expenses– This can protect you from overspending and you can grab my budget organizer in my free Starter Kit.
5. Keep Your Oldest Credit Card open– This will help your credit history. If it has an annual consider downgrading to a no fee card so you aren’t stuck with a yearly expense you don’t want. Downgrading the card does not open a new line of credit just a product change that won’t affect your credit.
6. Open Business Credit Cards– Typically they don’t affect your personal credit line history because they don’t report as open credit accounts. You will see a dip when you apply from the credit pull.
7. Consider Downgrading some cards instead of closing account– You will need to close credit accounts sometimes so you have available credit for new cards but there are times when you can downgrade the card to a no annual version. This doesn’t count as a new credit pull. There won’t be a welcome offer that comes with this but it won’t affect your credit because you are just changing the product of the card.
8. Check on your statements and match it with your budget– You have to be responsible when using credit cards so go over your statement and check it with your budget to see if you forgot expenses or need to monitor your spending more closely

Credit Scores and Travel Rewards Can Work Together

When handled wisely and responsibly credit cards don’t have to be a scary thing. Now hear me out when I say if you struggle with credit card responsibility please don’t follow these strategies. The points and travel are not worth it if you can’t pay for the credit card bill. We are using our spending in a responsible way to help us travel, pay the bills, and live a debt free life.

Next Steps:

• Download the Travel Freely App– Tracks your 90 day card window for you
  • Grab the app HERE
• Grab my free Starter Kit for Points and Miles– This will help you make a budget and stay organized from the beginning
  • Sign up HERE to get your kit.