Building credit is a great practice. It can open doors and give you more purchasing power. A high credit score is a wonderful asset.
If you want to improve your credit score, credit cards can help. This may seem counterintuitive, but it’s true. The more you use and pay your credit cards, the better your score.
Before you apply for credit cards, you must be informed of the risks. Credit cards can be dangerous if they aren’t used correctly. In fact, they can lower your credit score if you use them poorly.
The Best Type of Credit Cards for Building Credit
If building credit is your goal, there are cards to help. Some cards can make it easier to increase your credit score.
One main trait to look for is credit reporting. Your credit score can’t improve if your activity is kept secret. The company must report to the credit bureaus monthly to be helpful.
Be sure to use a card that does this. Reporting your regular payments helps build credit faster.
You should also look for card types that accept lower credit scores. If you are looking to improve, chances are your score is low. In this situation, you aren’t eligible for all credit cards.
Finally, look for cards without high fees. Some cards have fees that can make your financial situation worse. However, you can find a card that eliminates these extra costs.
Fastest Way to Build Credit Using Credit Cards
The best way to build credit is to use your credit card. Simply having a card doesn’t help you. You must use your card then pay it off to prove you’re creditworthy.
Use your card responsibly. Only make purchases you can pay off right away. Pay off your balance every month.
Some people set up autopay for their credit cards. This ensures that they don’t miss a payment. Autopay can be extremely helpful while building credit.
Can Any Type of Credit Card Help Build Credit?
Theoretically, having any type of credit card can help you build credit. However, this is only true if you pay your bills on time. Cards that make payments easier for you are more helpful overall.
Using your card for purchases is not enough to build credit. Instead, you must show a pattern of paying your bills on time. It will take months of responsible payments to build credit.
Though any card can build credit, we suggest those that make it simple. Low fees, reasonable rates, and reward points make payments easier. You’re more likely to use these kinds of cards regularly.
Don’t Credit Cards Lead to Debt?
Many people believe that credit cards lead to debt. However, they don’t have too. If you create a responsible budget and payment schedule, you won’t accumulate debt.
The key is to spend only what you have. Pretend that your limit is your current checking account balance. Do not exceed this ideal limit.