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Four steps to Build Credit using your Credit Card

By George Hauser
Published: Monday, December 7th, 2009

If you have started reading up on credit score tips, you might already be familiar with the importance of building a credit. If you have no credit records, lenders would think twice approving your loan or credit card applications because they have no basis on how you can handle the costs of borrowing. 

Still though building a credit and a good one requires you to open up credit card accounts, credit score tips will also remind you that the key in projecting creditworthiness to creditors is being creditworthy. That means that although you qualify for a credit card application, you can still be in a lot of trouble if you are not responsible enough to handle your finances. 

There are credit score tips that will advice you to use a credit card to build a good credit. Doing it the right way could be easy for those who are willing to make sacrifices on some financial aspects. The entire process could take up several months, and patience in building a good credit with a credit card will definitely get you there in no time. 

Here is how it works: 

Open credit card accounts

As mentioned there are several requirements for this. It will help if you are sure about whether you can afford the costs of borrowing money this way or not. You should consider having a stable source of income or a co-signer. The credit score tips will help you determine which type of credit card will suit a beginner like you or someone who is trying to repair bad credit. 

Though you could be tempted to open more than one credit card as there are many kinds of them, you don’t really need more than one credit card when you are building credit. One of the credit score tips you should apply tells you that too many credit card applications will look bad on your credit report and could decrease your credit score. You are building credit, not destroying one. 

Another thing you should remember when different store credit card offers are flashed on your face with the discounts they will give you is that credit card companies and stores know that most consumers do not pay off their balances. This is how they make money. The discounts are bait into additional costs when you have already signed up. 

Retrain yourself

One of the major causes of credit card debt is overcharging. Credit card providers will set a credit limit, an amount you must not exceed when you use your credit card. Most credit score tips will tell you to apply for a credit card that has high credit limit. This can work but for people who are just starting out, one way to restrain yourself from overcharging is to talk to your providers. Tell them not to increase your credit limit automatically. With this, you can focus on how much you are just willing to spend or borrow. 

Pay in full

Since you are mostly advised to be opening a single credit card account, you are also asked to pay your balance in full every month. This has a lot of benefits. 

First, you can build a great credit history by saying that you can pay for your dues without any problems and that you are responsible in meeting your monthly payments. Second, you discipline yourself by setting a budget. If you pay in full the first time, you learn to keep you balance low the second time. Third, you shorten the time you need to pay off your balance. This can prevent additional costs from accumulating in your account. 

Stay away from free offers

There are many ways by which providers attract consumers into applying for their credit card services. One effective way is to give out items for free! You might think of signing up, availing the free goodies and then canceling the card afterwards. Cancelled accounts damage both your credit report and credit score.

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