A credit card can have a positive or negative affect on your credit score; it is all depends on how you use (or do not use) your Credit Card.
Reasons Credit Cards can be good for your Credit Score.
Establishing a Credit Rating – Lenders use a credit report to decide whether or not you are a good candidate for a loan or credit and how much that limit should be. If they do not have a history on how responsible you are at managing debt, you may not be approved for loan.
Paying on time – One of the best things you can do to get a great credit score is to pay off your bills on time, each month, no exceptions.
Reasons Credit Cards can be bad for your Credit Score.
Late Payments – Even one late payment can adversely affect your credit score, know your personal limit and buy within it.
Applying for Every Credit Card Offered – We know, you’ll get 20% off at your favourite store, or a free gift card, or a toaster for applying for the store card. Don’t’ do it, unless you have made the decision this is the card you want. Every time you apply for a credit card, it lowers your credit score. Another issue is if you have too many credit cards and you use a large percentage of your available credit you are viewed as a risk by lenders as they all add up. Limit the number of times you apply for credit in a short period of time. Try to seek credit thoughtfully and on an as needed basis.
Closing an Account – You may not think getting a credit card is a big decision, but it should be. If you close an account after a short period of time, it can hurt your credit score. Limit the number of cards you have any make sure you use them from time to time, but even if you no longer use the credit card, closing an account could be detrimental. Look into credit cards with no annual fees.