Build Your Credit Profile With A Credit Card
For an American, it is essential to have a credit profile. Whether you want to take a home mortgage loan, auto loan or even rent an apartment, unless you have a credit profile, you will find it impossible to get either of these. Therefore, begin establishing your credit profile early.
Building Up A Credit History
Getting a gas card is easier for first timers.You can build up your credit history by opening a credit card account. It can be a secured card or a traditional card. Using either of the two for making all financial transactions will ensure that you slowly build up your credit history.
If you have ever taken a loan before, then your credit history is already established. In this case, one of the credit bureaus will have a copy of your credit report. Pull out a copy of your report and review it and check if you have any credit lines. If not, apply for a credit card so that you can begin to build up your credit history.
First Step To Get A Credit Card
For Americans, life is difficult without a credit card. Wherever you go, you need it. Whether you are shopping online, need funds in an emergency, rent a car or any other financial matter, you require a credit card.
To get a credit card, the first thing that you must do is to evaluate your credit report and see what it contains. If you have taken a loan before that has been co-signed or have a joint account, check if the report is positive or if it contains negative items. Credit cards are easy to get if there are positive items in your credit file.
Types Of Credit Cards
After reviewing your credit report, decide what kind of card you want.
- For a first timer, it will be easier to get a secured credit card.
- If you are a college student, then you have the added option of applying for a student card.
- If you have already established your credit profile but have bad credit then shop for credit cards that are especially meant for those with bad credit.
After you decide the kind of card that you want, apply for it by filling up the application form. The company will respond to your application soon with an acceptance or rejection. If your application is rejected, then the reasons for rejection will be given and a copy of your credit report will be offered to you for free so that you can review it. Use this opportunity to correct the negative items.
Using Your Credit Card
When you get your credit card, use it responsibly. There are certain rules that you must follow to maintain good credit. These will help to build up positive credit history.
- A rule of the thumb to be followed for maintaining good credit is to use less than 30%-35% of the total credit available. More than that is not considered to be good.
- Avoid carrying high balances and charge only that much to your card that you can repay in full. Repaying balances completely helps to build a positive credit history.
- Use it at least once in a month to build up your credit history.
- After you have established your credit with your first card, apply for another card.
Following these steps will make a noticeable change in your credit history in as less as 6 months. For first times, the credit score will be in the average range of 600. Those with bad credit, building up a positive credit history, the credit score will improve slowly but steadily.
Improving Your Credit Score With Credit Card
Old credit accounts add to 35% of your credit score.
After establishing your credit history, you can get more cards. Financial experts advise getting at lease 4-5 credit cards so that you can have a good credit score. But continue using your old cards and your very first credit card too as it contributes towards a sizeable percent of your credit score.
When you have a good credit history and score, you will be eligible for lower loan rates when you apply for home or auto loans. Establish your credit profile easily with a credit card and use it responsibly to have a positive credit.
