Top Ways to Build Credit With a Credit Card
Building credit is easy when you have a credit card. However, it does not mean that you can achieve a favorable score just by simply using the card. It can help build and raise your score, but it can also damage it and even put you to debt. A good credit score shows your creditworthiness to banks, lenders, insurance companies, and landlords. There are even some employers that check your credit report to learn how responsible you are as a card holder.
Once you have the credit card you want, your main goal should be to reach at least a score of 711. This way, you can qualify for competitive interest rates. Don't stop there, though. You need at least 751 to get a card that comes with the most competitive rates on the market, a feat that many cardholders desire. To reach this score, you will need your credit card. You can also do the following to achieve your objective:
Don't apply for too many cards.
If you have one card, you probably do not need another one. Many people make the mistake of getting more than one card because they believe that this will raise their scores faster. You actually don't require gas cards, store cards, or the like. You can get all the rewards that you want with just a single card. With too many cards, it would be easy to be lured into spending cash that you don't have.
Don't choose to have a high credit limit.
Most people who have just gotten their first credit card will be given a low credit limit, typically around $200 to $500. When the creditors see that the card holder is able to pay all his or her balances on time, a credit limit increase may be offered. Having more than a thousand dollars to spend monthly is cool but it is one of the reasons why people get into debt in the first place.
Pay your balances in full every month.
This is the most important way when it comes to building history - not just simply a credit history but a good one. If you meet your monthly payments every month, creditors will report them to the credit bureaus. This will significantly increase your score over time. You should be able to stay within your budget range when spending against your card. A payment notification would also be beneficial for you.
Don't close your other accounts.
If you have other credit cards but you don't use them anymore, you should not cancel them. If you do, your score would eventually decrease. Instead, use them at least once every six months so that your creditor would not stop reporting the card's information to the credit bureaus. In reality, if you keep your old cards, a long history can benefit you as well.
Keep your balances low by not exceeding 30% of your credit limit. For instance, if your credit limit is $500, you should not have a balance that is over $150 to keep building your credit the positive way.
Once you have the credit card you want, your main goal should be to reach at least a score of 711. This way, you can qualify for competitive interest rates. Don't stop there, though. You need at least 751 to get a card that comes with the most competitive rates on the market, a feat that many cardholders desire. To reach this score, you will need your credit card. You can also do the following to achieve your objective:
Don't apply for too many cards.
If you have one card, you probably do not need another one. Many people make the mistake of getting more than one card because they believe that this will raise their scores faster. You actually don't require gas cards, store cards, or the like. You can get all the rewards that you want with just a single card. With too many cards, it would be easy to be lured into spending cash that you don't have.
Don't choose to have a high credit limit.
Most people who have just gotten their first credit card will be given a low credit limit, typically around $200 to $500. When the creditors see that the card holder is able to pay all his or her balances on time, a credit limit increase may be offered. Having more than a thousand dollars to spend monthly is cool but it is one of the reasons why people get into debt in the first place.
Pay your balances in full every month.
This is the most important way when it comes to building history - not just simply a credit history but a good one. If you meet your monthly payments every month, creditors will report them to the credit bureaus. This will significantly increase your score over time. You should be able to stay within your budget range when spending against your card. A payment notification would also be beneficial for you.
Don't close your other accounts.
If you have other credit cards but you don't use them anymore, you should not cancel them. If you do, your score would eventually decrease. Instead, use them at least once every six months so that your creditor would not stop reporting the card's information to the credit bureaus. In reality, if you keep your old cards, a long history can benefit you as well.
Keep your balances low by not exceeding 30% of your credit limit. For instance, if your credit limit is $500, you should not have a balance that is over $150 to keep building your credit the positive way.
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