When you get a brand new credit card, you begin the lifelong process of building your credit rating. If you are wise with your purchases, you can end up with an EXCELLENT credit score. But, if you don’t use your card wisely, you may end up with a poor score. A poor credit rating can affect your life in many ways, so it’s in your best interest to get a good credit rating.
Before you start spending with your credit card, follow the advice below to help you get--and keep--an excellent credit rating:
- Give it Time -- A good credit rating isn’t built overnight. It takes years of wise spending and punctual payments to build a good credit score. Don’t expect your credit score to be outstanding within 6 months to a year, but you’ll need to give it at least 4 or 5 years until you have a great credit rating.
- Pay On Time --No matter how large or small, you need to be punctual with your payments. You can set up online bill pay if you’re a bit scatterbrained, or use Google Calendar to remind yourself to pay the bills on time. Pay off as much as you can, but ALWAYS be on time with payments.
- Don’t Overdo it With Credit -- How much credit do you actually NEED? If you apply for a lot of credit, it gives lenders the impression that your economic situation is unstable. Only apply for the credit that you actually need, as it will prove that you are a wise spender.
- Be Careful With Your Limits -- It’s recommended by experts that you keep your credit use at less than 30% of the limit your credit card allows--i.e. $300 if your credit limit is $1,000. When your credit score is examined, it will prove that you can handle credit properly.
- Pay it Off Quickly -- Credit card companies dream of customers who only make the minimum repayments every month, as that’s how they earn all their money. Instead, make sure to pay off as much of the credit card debt as you can. The faster you repay the debt, the less money you lose, and the better your credit score will be. Even if you can’t pay off the debt in full, at least pay more than the minimum monthly payment.
- Start with Just One Card -- Don’t yield to the temptation to get a number of credit cards all at once. Start with a single card from your current bank, and use that regularly to improve your credit score. Don’t get credit cards from Wal-mart, Costco, Sam’s Club, American Airlines, and all the rest. Stick with the one card until you find another that offers REAL benefits, and only apply for more cards once you can handle the one you have responsibly.
Getting a good credit rating isn’t too hard, provided you are a savvy shopper. Don’t spend more than you have, pay your bills on time, and be careful with your credit card use, and you’ll find that your credit score will only improve with time!
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