Credit cards are often the first step for a consumer to build
their credit score. When you make regular payments with a small
credit limit, lenders will be more willing to lend you larger
amounts. Before you jump out and open an account, make sure you
don't have too many credit lines open or otherwise hurt your
credit.
Pick A Good Card
Credit card companies offer several different types of credit
cards for consumers. You can find student programs that require
no co-signer or income. This is a great offer for your first
card, but these cards also have higher rates.
You can also find cards with cash back rewards or other
incentives. The trade-off are higher rates though. However, you
can find no frill cards with low interest rates if you plan to
carry a balance. Whichever credit card program you choose, make
sure it fits with your financial goals.
Start Small
When you are building your credit score, you want to start
small. Open one account and use it at least once a month to make
a purchase. This can be a regular purchase that you have cash to
pay for. The point is to use your credit and then repay it.
Every time you make a payment, it will show up on your credit
report.
Lenders will also look at how often you make payments. So using
your card once a year and paying off the entire balance that
month won't do you much good. Your credit report covers three
years' worth of payment history, and lenders want to see your
payment pattern.
Don't max out your card either. Only use a small portion of your
credit to show lenders that you don't get yourself into
financial binds.
Maintain Your Credit
Regular payments are only one part of your credit score. You
also want to keep your credit in good order. If you have dozens
of accounts open, close the ones you don't use. The less open
credit you have, the more you will be eligible for, a bonus when
buying a home or car.
Also be sure to take advantage of your annual free credit
report. Look over it to make sure that your credit history is
correct. If you find any discrepancies, resolve them with your
lender.
About the author:
See my recommended
Credit
Card Lenders online. Carrie Reeder is the owner of
ABC Loan Guide, an
informational website about various types of loans.
