If you're trying to establish your credit, you need to start with a credit card. Low-limit credit cards are a great way to build your credit, especially if you're careful. However, if you make mistakes with your credit card, you could end up ruining your credit before you get a chance to establish a positive track record. Here are four tips that will help you establish credit and avoid problems with your new credit card.
Don't Go Overboard on the Credit Cards
Once you're approved for your first credit card, avoid the temptation to apply for more. Having more than one credit card while you're trying to establish credit can end up causing you problems later. While you're establishing your credit and learning how to handle your new credit cards, limit yourself to just one.
Make Small Purchases Each Month
Now that you have your first credit card, you'll need to use it from time to time. Your credit card won't help you establish credit unless you use it. The best way to use your credit card to establish a credit history is to make several some small purchases each month. Credit agencies track your credit card usage, which means they'll know as soon as you start using your card. That's when your card will start having an effect on your credit score.
Pay Each Bill in Full
Once you start using your credit card, you'll need to pay the bill in full each month. That's one of the reasons that you want to keep your purchases small. Those inexpensive purchases will be easier to pay off each month. One problem with making just the minimum payment is that the interest starts to build up, which increases the amount you actually owe to the credit card company. Paying your bill in full each month will help you avoid trouble with interest debt.
Pay Attention to Your Monthly Statement
When you get your credit card statement each month, take the time to go over each detail. Your credit card statement contains information you'll need if you want to maintain a good credit rating. Pay close attention to errors, such as charges for items you didn't purchase. If you notice problems with your statement, you'll need to contact credit card services immediately. They can help you avoid issues that can affect your credit.
Now that you're trying to establish your credit, use the tips provided here to help you avoid problems with your new credit card.Share