How a Credit Card Can Help You Build Credit

April 7th, 2017 | Author:

[A]fter the recession of 2008, more people have become conscious of debt. Some of them have decided to give up using credit cards or other forms of credit in favor of a cash-only approach. While this is a good idea for people with bad spending habits or those who have a tendency to live beyond their means, it can be a mistake for others.

Credit cards can help you build or rebuild credit, giving you more access to things like new cars and a home in the future. Here are some ways a credit card can help you build credit and some truths about having one.

A Credit Card Allows You to Establish a Credit History

A credit card helps you build a credit history if you have none. Just open an account and use your card responsibly, and you will start to see an improvement in your credit score in about six months. It’s a common misconception that you must carry a balance for it to work. You do need to use the card, but you can turn around and pay off the balance before you’re charged interest. As long as you use it on a regular basis, the card will stay active and be reported to your credit report.

A Credit Card Gives You a Mix of Credit

One thing that affects your credit score is the type of credit you have. If all you have is a car loan or personal loan, you need to get a credit card to have revolving credit. This type of credit weighs heavily on your credit score, and it can help you improve your credit rating.

A Credit Card Can Improve Your Credit Utilization Rate

Another factor in determining your credit score is how much credit you use. If you have a credit card and keep the balance low, ideally at 30 percent or below, it will boost your credit score. It shows that while you have credit, you don’t use it too much.

A credit card can help you build or improve your credit score. Just make sure you know how to use it responsibly to enjoy the full benefits.

Newest Answers

Why Your Credit Score Matters If You’re a College Student

November 17th, 2017 | Author:
h

[Y]ou don’t have much money and any you do have goes towards paying your college expenses. You may wonder why a credit score even matters at this stage of your life. If you haven’t given it much thought before, you need to become aware of it now. Your Future Depends On It Your credit rating […]

Continue Reading »

What You Should Know about Credit and Car Insurance

November 15th, 2017 | Author:
h

[I]f you have poor credit, you probably know it will impact your ability to get a credit card or loan. However, it can also influence how much you will pay for car insurance. The connection between credit rating and car insurance may seem odd to consumers, but it is an essential combination for insurers. Taking […]

Continue Reading »

What You Need to Know about Disputing Information on Your Credit Report

November 13th, 2017 | Author:
h

[I]f you check your credit reports, there is a good chance that you might find an error. Statistics show that one in five credit reports contain errors. That’s not good news for consumers who rely on credit reports for new credit and loans. However, you can dispute any errors and get them corrected. How to […]

Continue Reading »

What You Must Consider about Consolidating Debt

November 10th, 2017 | Author:
h

[Y]ou have a hard time keeping track of the bills you have to pay. With multiple credit cards and more than one loan, it’s a wonder you keep it all straight. You may wonder if a debt consolidation loan is right for you. Before you go this route and try to find a way to […]

Continue Reading »

Understanding What Charged-off Means

November 8th, 2017 | Author:
h

[I]f you’ve looked at your credit report recently, you may have noticed that an account says Charged Off. You may not be sure what that means for you and for your credit score. It’s an important term you should understand to help you improve your credit score. A creditor will charge off your account if […]

Continue Reading »

Start Saving for the Holidays Now

November 6th, 2017 | Author:
h

[I]n reality, you should have a savings plan all year long for the holiday season. However, it’s never too late to start. Whether you buy gifts for a lot of people, host dinners or just go out and enjoy all of the holiday activities, it usually costs a lot of money during this time of […]

Continue Reading »

How Unemployment Benefits Can Help

November 3rd, 2017 | Author:
h

[W]hile you may be aware of unemployment benefits if you lose your job through no fault of your own, you may not think you qualify or will be able to get them. However, they can be a lifeline until you are back on your feet with a new job. File ASAP Many people don’t get […]

Continue Reading »