Building credit is something many people care about. Good credit can open financial doors and make life simpler for you from a money perspective. However, a lot of people make mistakes when it comes to overusing their credit card, and while they may want to get a good credit score, their credit card usage may say otherwise. Here are a few tips on what to do and not do when trying to build credit:
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Don’t open more cards than you can handle
It’s easy to say yes to all of the cards that you’re offered, but before you know it, you may find that you’re drowning in credit cards, unable to handle the payments. Not only that, but too many credit cards aren’t great to have when you’re trying to build up an excellent credit score. If you use any type of annual credit report, you’ll be able to more easily see how things like multiple credit cards can impact your score, so keep this in mind when opening new accounts.
Do open more than one
On the flip side, just one credit card won’t cut it when you need to build up a history of credit card usage. So, while you don’t want to go gung-ho crazy with credit cards, you also want to have more than just one or two. You’ll want to stay organized with your cards.
For example, designate one card to only be used for things like groceries or gas, while another one may be used for bigger expenses from month to month.
Don’t be late on payments
One of the things that could negatively impact your credit-building efforts is being late on your payments. You want to make sure that you pay your cards on time if you’re hoping to build up your credit to get the kind of score that will open many financial doors for you, and more.
Schedule your payments to line up with your paychecks if you don’t have a very forgiving income at the moment. Make sure you make your CC payments a priority so that you don’t find your credit score dropping lower than you’d like.
Do minimize your CC spending
A mistake that many people make when it comes to their credit cards is that the card is like free money. It can be useful for making payments on things when you need a little time, but depending on your credit card for money that you don’t have will result in you not having the money that you need. Be careful with how you spend using your credit cards so that you can avoid issues with collections and your credit score, as well as having to spend more money than you would otherwise.
Don’t use your cards too much
While you do want frequent monthly payments on your cards, you don’t want to be spending too much on them on a consistent basis. You also want to avoid getting close to your credit card limit, as that can also reflect negatively on your account. Instead, try to keep your credit card spending for purchases that you know will help you build up that score that you want so much.
If you’re struggling to manage your credit, you could reach out to a financial or credit advisor to help you learn how to best handle your credit card use in order to achieve the credit score of your dreams. Once you get there, you’ll be happy you took the time to get your credit in order.
In the U.S., a lot of big financial moves and even basic necessities like a roof over your head can be dependent on a good credit score. So, if you want to be sure to reach your desired goals, consider these abovementioned tips so that you can start building a better credit score today.