While everyone is talking about the use of credit cards to establish credit, no one is reminding you the repercussions of carelessly handling these cards. It is important to learn how to build credit. Keep in mind that no credit history is better than poor/bad credit history. And that a poor history will have negative effects on your credit score. So if you’re purpose is to establish credit using your card then here are 4 ways to safely go about it.
Limit Yourself to a few Cards
Honestly, you don’t need several credit cards; one card should be enough to cater for your needs. These include shopping cards, gas cards or any other type. Too many cards will have a bad effect on your overall credit score. While you may see your shopping cards as good way to purchase products at a discount, the business owners have a different view of it. Because most people don’t settle their balances each month, their aim is to earn more interest than what they offer customers in savings. Avoid the temptation of spending cash you don’t have even when the best sale is going down. Lastly, always choose cards with low penalties and fees.
Keep a low Credit Limit
The key to keeping a low credit limit is always a phone call away. Simply ask the bank to stop raising your limit automatically.
This will help prevent you from undisciplined spending. Consider setting a limit at $500 or $1000 which should be enough to cover all the spending you may need in a month. Settling such low amounts should be relatively easy.
Fully settle your Balance every Month
A desirable Credit history is established by proving how responsible you are when it comes to settling your monthly payments. It has to be on time, fully settled and on a regular basis. This should be easy if you spend within the amounts you budgeted for. You can pass up huge debts by simply not using your card to charge a product that you can’t pay for in cash. This is one way to show you’re in control of your money matters and can build good credit.
Handling credit cards call for thorough adherence to one principle in life— the aspect of moderation. You fail to monitor your spending and your credit limits, you worsen your future.