5 Ways To Use Credit Cards To Boost Your Credit Score
Credit cards are a big part of most Americans' credit history, and so they deserve special attention for those who want to build and maintain a great credit score. While the wrong use of credit cards can damage your score, the right use will help it be the best you can make it. Here are a few ways to use your credit cards in a way that will boost your credit history.
1. Get a Credit Card
Some consumers hesitate to get a credit card because they've been told that credit cards are bad. However, not ever obtaining one at all will likely harm your credit as well. It prevents you from holding a balanced variety of credit, establishing a history, and showing responsible use. And because most people start their credit with revolving credit, you may never be able to get your score off the ground.
2. Maintain a High Limit
The available limit on your credit cards represents the amount that the lender believes you to be capable of paying back. The more available credit on your credit history, the better you look to new lenders. So seek out progressively higher limit cards, but be certain you only use a small percentage of the limit. If your use goes up on a regular basis, ask for an increased limit to retain a good percentage.
3. Set Up a Recurring Charge
Using your credit card and paying it on a timely basis every month builds a great payment history. So you generally do want to use the card on a regular basis. A small recurring charge or two is a great way to do this. It could be anything from your Netflix subscription to a monthly wine package. A small charge paid off on time each month gives you the same boost as paying a large amount.
4. Discuss Things Before Closing
Credit cardholders might consider closing their account for many reasons. Perhaps it's to avoid an annual fee or they'd like a lower rate or better perks. But before you close that card, call your card issuer and discuss your concerns. You may be able to negotiate a change that fixes the problem. Why bother? Closing that card will reduce your good credit score, so avoid it when possible.
5. Preplan Your Usage
One of the biggest reasons for credit card trouble is free, unplanned usage. Maintain control over your own card by determining in advance what it will — and won't — be used for. Keep your everyday card with you but leave your emergency card at home. Earmark a card for use when there are low-interest offers. Or give children a designated family card. Planning ahead will keep you in charge of your money.
Where to Start
Want more tips for using credit cards in ways that will give you a credit score boost? Start by meeting with a credit card service in your area today.
To learn more, contact a company like FCCU - First Community Credit Union.
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