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How to Build Better Credit With Your Credit Cards

Building a good credit score is key to your financial health. It saves money, increases your housing opportunities, and qualifies you for helpful discounts. With national household debt recently rising to $14.3 trillion, now’s the time to strategize for your personal healthy credit development.

Of course, one of the most effective ways to build credit is by using a credit card. However, it matters how you use that credit card. Remember these guidelines to ensure your credit cards help (rather than hurt) you and your credit score. 

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1. Pay on Time and in Full 

This is one of the simplest yet most important things to note. Good credit grows over time; a vital part of that is creating a good track record with your credit card supplier. Credit history, next to actual credit utilization, is crucial in calculating your credit score. If you always pay fully and on time, you’ll establish good credit and avoid paying interest. 

Staying on Top of Payments

As vital as it is to make on-time payments, it’s deceptively easy to let deadlines slip by. Remember to always start with a budget, making spending money you don’t have less tempting—leaving you unable to pay your statement in full. In addition, you can set up reminders or automated payments, so you’re never late on a payment. 

2. Always Keep an Account Active

Naturally, your credit history also depends on how long you’ve had a card open.2 Ideally, you would open a credit card as soon as possible and keep that card active to increase your average account age. Regardless of when you open your first credit card, you can improve your credit by keeping that account open or “active.” 

Hopping between credit card suppliers could damage your credit history and potentially harm you in the long run. Avoid this by carefully researching your credit card options, picking the best card for you, and keeping that credit card open for a significant time.

3. Don’t Use All Your Credit 

Credit utilization has an even greater impact on your credit score than credit history. In essence, credit utilization measures how much of your available credit you actually use. This is typically calculated as a percentage. 

Remember that just because you can spend it doesn’t mean you should. Using too much of your available credit damages your credit score and bank account. Experts suggest not exceeding 30 percent of your credit limit.

4. Use the Right Card for You

These factors can be more easily controlled if you follow this step first: pick the right card for you and your spending habits. Don’t just pick a card because it’s available to you. Evaluate and compare all of your options to better make an informed decision. Some cards, for instance, offer specific perks that may match up with your spending habits. If you spend a lot of your income on travel, hotels, or even clothes shopping, there’s a credit card that will complement your expenses. 

Simple is better. Instead of playing the rotational categories game and creating a hassle in your life, we recommend picking the best rewards and sticking with that card. We prefer the Citi 2% cashback card on every purchase. Other good cards to consider are travel cards or the Costco card that offers 4% gas, 3% restaurants, 2% at Costco and 1% on all other categories.

The steps to attaining a good credit score don’t have to be a mystery. You can make some big changes by just tweaking your credit card habits. Good credit is built over time, but as long as you use these guidelines as a foundation for your credit usage, you’ll be on the track to better credit

Invest In a Life You Love,

Donovan Carson - founder of Carson Capital



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