How to Build and Maintain Good Credit with Credit Cards

Credit is a snapshot of how consumers manage their finances. With good credit, a consumer has the ability to get things such as a car or a home. These purchases typically require a loan to pay for them, and good credit ensures that a lender will decide that a consumer is a good credit risk. Poor credit means that consumers won't qualify for loans or the loans may have higher interest rates. It's preferable to build and maintain good credit to ensure purchasing power.

Establishing Credit

  • Credit history includes information about one's repayment history, the length of this history, the amount of debt, the types of credit used, new credit applications, and any defaults.
  • Establishing a positive credit history has many benefits. Having credit available to use can be invaluable in emergencies, and it is often safer to use credit cards for purchases because it eliminates the need to carry cash.
  • Having a good credit history will enable consumers to make large purchases such as cars and houses. These personal business solutions generally require financing over time.
  • Establishing good credit takes time. Maintaining a checking and savings account with a bank is one step toward establishing positive credit history. Getting a credit card is usually the next step in building good credit.
  • An older adult may need to establish credit after a divorce or a spouse's death. Applying for a department store credit card or an oil company credit card may be a suitable place to start.
  • When working to establish credit, open one credit card account and concentrate on making regular, small charges and paying them off in full each month.
  • Credit offers that sound too good to be true likely are. Avoid advertisements for credit that promise unusual financial offers. Often, hidden terms exist in these offers that will negatively impact the consumer.

Maintaining Good Credit

Credit Management Tips

Ways to Raise Your Credit Score

  • Consumers who find errors on their credit report can have them corrected. The credit bureaus and the source of the erroneous information both have responsibilities to correct inaccurate information. Inform the appropriate credit bureau and the company involved to correct errors.
  • Credit repair scams are prevalent. It's possible to raise credit scores without paying a company to assist with this process.
  • Pay down debt as quickly as possible to increase credit scores. Merely moving debt around between various credit card accounts will not improve a credit score.
  • Avoid applying for numerous credit cards in a short period of time. This type of activity can indicate financial trouble to lenders.
  • Take out a small loan with a cosigner. Making timely payments and paying off the loan in full will help raise a credit score.
  • Seek the help of a reputable, nonprofit credit counselor before you become delinquent on accounts. A counseling service can help you restructure your debts to resolve and prevent issues.
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