When you are first establishing your credit, you can make a huge difference in the quality of your credit report with some seemingly insignificant actions. Your credit report contains information that is used to create your credit score. Companies use your credit score to decide if you qualify for loans, lines of credit, and other conveniences. It is also used to determine how high your interest rate is for these items. So use your first credit card wisely to save yourself headaches in the future. Here’s how:
· Always pay your bills on time. You have probably heard this before, but did you know that as few as two late payments can adversely affect your credit score? Always pay your bill on time or early if possible.
· Pay more than the minimum balance. In many cases, the minimum balance is only enough to cover the interest that the company has charged you for your balance. Too many people let their balance get out of hand because they only pay the minimum balance and interest continues to accumulate. So pay as much over this amount as you can, even if it is only five or ten dollars.
· Use at least one third of your available credit. If you get your credit card and only spend fifty dollars, then the credit-reporting agency will not have enough information to create an accurate credit history. Therefore, your credit score will be lower than it should be based simply on lack of information. So if you have a six hundred dollar credit limit, spend at least two hundred dollars and pay it back faithfully and on time.
· Avoid taking cash advances. Usually, cash advances are subject to a much higher interest rate than regular purchases. This can get you into trouble when trying to pay back your balance and result in late payments.
· Use your card at least once every two weeks. This will help you to establish a credit payment history over the course of a few months. Without this payment history, the reporting agency has no way to know if you will pay any future debt on time.
Rebecca Spitzer recommends Find Credit Cards if you wish to apply for a no credit credit card. See www.findcreditcards.org/type/no-credit.php for more information. |
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