Everyone knows that bad credit can ruin your life. Often, bad credit can create more serious issues in your career. But what if there were a way to use credit cards to build a better credit score?
Many people don’t know how to get started with credit. It’s hard to get credit when you don’t have any and often this puts people in an uncomfortable position. Getting credit cards with no credit often sounds like a dream. Times are a little out of whack with the recession and people are trying every means that they can to eliminate themselves from going under.
Many banks are not open to giving out money to people, especially those who have no credit history. The chances of you thinking that you can obtain a loan from a bank and get credit are slim to none. But, there is good news. There are companies that are willing to lend a helping hand in your struggle. Credit is what is going to help people make it through this recession. It seems the people who have good credit are the ones that are doing just fine. The ones who do not have credit or bad credit are faltering.
At first, all of the cards that you try to apply for will mention that you do not have enough credit history. This is an uncomfortable position but you can get through it.
There have been many companies now that have emerged from the darkness to bring light on this crazy situation. Many companies are willing to give people who do not have credit a chance. Most of the cards will require you to put down some sort of deposit, but it will all be worth it in the end. You can use the secured card for a few months and that will raise your score so that you can get regular cards.
Once you have proven your ability to make on-time payments, it’s easy to get approved for additional credit. Well, good news. You can turn your credit cards into credit building machines. Here’s how to do it.
Use Them to Make Small Purchases
The key to building credit with your credit cards is using them wisely. For example, using credit cards to make small purchases that you can easily pay off in full at the end of the month is a great idea. One option is to use a credit card to pay a bill you have to pay every month. Maybe your water bill or electric bill. Then keep that money aside and make the payment in full.
This is a great way to show creditors that you are good at making your payments. It also keeps your balance low.
Never Close Accounts
It might be tempting to close credit accounts once you finally pay them off, but that could do more harm than good. Instead, keep your accounts open even after you pay them off. Find credit cards that meet your needs and then keep them open as long as you can while maintaining a low balance.
View them Like a Debit Card
One of the biggest mistakes people make with credit cards is treating them like an ATM machine, instead of a debit card. Add to that the fact that it can be tricky to track spending with credit cards, and you could quickly find yourself in a pile of debt.
To use your credit cards to build your credit score, treat them like a debit card by keeping a budget. Spend only what you know you can pay off in full at the end of the month.
Once you get approval for the card, it is important to keep in mind that you are going to use the card for credit repair by building a positive credit history. This means that you should not use the secured card to acquire debt. The card should only be used for making small purchases that can be easily paid off at the end of the month. If there is a purchase that you cannot afford to pay for, avoid charging it to your account.
There are several other things you can do to build your credit score with credit cards, including keeping a low revolving credit balance and always paying more than the monthly payment. Use these tips consistently and you’ll see credit score improvement in no time.