What’s most important to know about credit?
- Bad credit is better than no credit.
- A good credit score is important for many reasons, including employment.
Strategies to Build Good.
- Start by being an authorized user on another person’s card who is great at paying off their credit card.
- Pay your bills on time or pay it off.
- Student credit cards have lower limits so that they can’t create a large debt.
- Ensure children or students with credit cards are responsible to pay on a monthly basis.
- A secured credit card is different from a debit card. This card has money deposited as security. This is used if you have bad credit and are working on increasing your credit score.
Tips to increase your credit score.
- Keep the amount you owe less than the credit limit. You can get charged for this.
- The lower the credit limit makes up 30% of your credit score.
- Keep your credit cards for as long as possible to show longevity.
- Make your payments on your credit cards as soon as possible.
How to use credit cards without negatively affecting your credit score.
- Make payments on time or early.
- Consider setting up automatic payments.
- Pay more than the minimum.
- If possible, pay off your credit card in full each month.
- Stay below your credit limit – less than 30% utilization. For example, if your limit is $5000, then when you approach $1500, make a payment.
- Look over your credit card statement to ensure your payments are yours.
- Contact your credit card statement if things look unfamiliar.
Important to remember.
- Report a lost or stolen card immediately.
- Many cards allow you to pause them before having to cancel.
- Monitor your card regularly.
- Check your credit score regularly.
When should you make your monthly payments?
- If you are paying on time and in full, you can make your payments anytime.
- Keep your use of the credit card under 30% of the credit limit.
How interest is calculated on your credit card.
- The average daily balance is used to calculate the amount of interest due on your credit card.
- They apply the interest rate on the average daily balance.
- Example. If you make a charge on the 10th of the month and nothing else, you will be charged for that average daily balance until you make a payment. So the sooner you make a payment, the better, even if you make a payment every couple of days.
- This will lower the interest you will pay