Your credit score is your borrowing power, a guarantee for your lender and it builds your goodwill. You are not mistaken by asking if American Express is good for your credit score, because by your question I am guessing you’re are trying to improve your credit score above the average. Here in this article, you will get to know in detail.
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Is American Express Good For Your Credit Score?
Yes, absolutely Yes. American Express is good for your credit score. American Express can help your credit score if you are the primary account holder or an authorized user aged 18 or older on an American Express credit card or charge card account. For an Amex card to be good for your credit score, the account must be kept in good standing with on-time monthly bill payments. American Express is Good For Your Credit Score
Importance of a Good Credit Score
A good credit range depends on where a score comes from and who’s judging it. And there are different scoring companies, so you can have more than one credit score. The average credit score in the U.S. in 2021 was 716, so any score higher than that could be considered above-average.
Having a high credit score could give you access to more favorable loans, credit cards, and more. Good credit. It’s because credit can touch many parts of your life. For example, it may impact where you live, how much money you can borrow, and how certain employers may view your job application.
7 Best Ways to Help Build Your Credit score
Building good credit takes time, but the right moves can get your credit-building timeline started. Building credit, by its nature, takes time. Time to take action that has an impact, and time for creditors to report that impact. That said, there definitely are some best practices to build credit that many experts recommend. Acting strategically, you can shave months off the credit-building process.
- Research, to Know Where You Stand
If someone asked for driving directions but couldn’t tell you where he was starting or where he was headed, could you help? Of course not. And yet many consumers don’t know what credit score they need or what they have now. For example, the average credit score to get a new car loan is 713, and 662 for a used car—and your score affects not only whether you get the loan but what interest rate you pay.1 Do your research. Then find out what your credit looks like now.
There are three major credit reporting companies (Equifax, Experian, and TransUnion) and you’re entitled to a free report from each once a year. You can request a report directly from the agency, get it from FTC-approved annualcreditreport.com, or use a paid service.
Why pay for something you can get free? Because you can get more. Free reports may not include your credit score, for example.2 The price may include credit monitoring and give you access to your report any time, not just once. Shop around—not all services provide all three reports, which is useful because they sometimes show different things.
- Clean Up Your Credit Report
Next, review your credit report. Carefully. Credit reports are not infallible, so look for debts that are not yours, outstanding balances that you believe were paid, and other errors. You can dispute anything that you believe is incorrect. But be aware that open (unresolved) disputes can work against you when applying for a mortgage.
- Work to Remove Late Payments
Late payments do serious damage to your credit score. But if you slipped up just once there may be hope, especially if you have a long or good relationship with the creditor. You’ll have to keep at it, but you may be able to persuade the creditor to make a goodwill adjustment and remove the late payment.
- Aggressively Pay Balances
The Fair Isaac Company (you may know it as FICO) says that about 30% of your credit score is based on how much you owe. That portion of the score considers two things: The total you owe and the portion of your available credit that is used. Paying down balances takes action on both.
A key best practice for building credit is to forget about the minimum payment. It’s better to pay as much as you can as often as you can. If raising your credit score is your top priority, you may wish to consider a second job or side gigs to give you more income. The faster you can get to zero balances the better.
But if you pay for everything with a credit card and get close to, or hit, your limit before paying off the full card balance each month—like people who use rewards cards sometimes do—consider paying twice a month instead of once. Otherwise, your credit report may consistently show you at your credit limit, which hurts your score.
- Manage Your Credit Utilization
That “portion” of your available credit that’s used up is called your “credit utilization rate”—and it matters. A lot. To keep that section of your credit score healthy, experts say to avoid using more than about 30% of your credit limit.4 The best way to do that is to pay down the balance until you hit that target.
if you can’t afford to pay down the balance, or you want an extra boost to your score, there are other things you can do. For example, one of the best ways to build your credit is to seek an increase in your credit limit. Let’s say you have a $500 credit limit and a $300 balance. Your utilization rate is 60%.
But getting approved for an increased limit of $1,000 instantly drops your utilization rate to 30%—on the same balance!
The same thing happens if you open a new credit card with another $500 credit limit. Of course, using either approach to increase your credit limit is only wise if you’re a responsible enough cardmember to keep spending in check, or to manage the payments should you ever actually reach the new higher limit.
- Resolve Accounts in Collection
If an account is turned over to a collection agency it’s a big red flag to lenders. You’ll want to get those paid ASAP. But you may not want to just send a check for the balance because that alone may not help your score much.5 Instead, reach out to the collection agency and negotiate to pay the balance in exchange for having the debt removed from your report—it’s called a “goodwill deletion” request.
- Get Credit for More of What You’re Paying
Until recently, only borrowing (and repaying) could really help your credit. But now some services will give you credit for other bills you pay. With some caveats, for example, Experian promises an “instant” boost to your score by reporting payments to your utilities and phone company that you may not otherwise get credit for.6 Other services similarly report rent payments.
CONCLUSION
Good credit is like trust: It takes a long time to establish and the blink of an eye to destroy. So is American Express good for your credit score?
Of course, you have seen for yourself that it is good and is able to help you build a strong and trustworthy credit score that will be able to attract potential lenders your way.
