Using Credit Cards to Bolster Your Credit

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FILE PICTURE-PATRICK NGANGA

High credit scores help in many ways such as securing a quick emergency loans, qualifying for car loans, business loans, equipment loans and the biggest of all, achieve your American dream of homeownership. You also get preferred interest rates, which help you keep more of your money, making you build a better financial future.

Before we delve into ways to build your credit using credit cards, it’s very important that you understand the fundamentals of building a great financial plan. Please revisit my previous article —–to make sure you especially understand your mindset, set a budget and live below your means.

So, after you’ve done all that, these are the ways you can use credit cards to help build your credit scores.

  1. Choose the right card–get a card with the lowest fees such as $0 annual fee, the lowest interest rates and great protection incase of fraud or getting hacked. It’s ok to start with a secured credit incase you have bad or no credit at all.
  2. Don’t carry a balance month to month. Use your credit card then pay it off as soon as the bill arrives or within the grace period. This will help build your credit because lenders will see that you pay off all your bills on time. 
  3. If you really really have to carry a balance, make sure it’s below 30% of your limit. This is because it proves that even though you have access to more credit, you’re only using a small % of it. It is however recommended that you do not carry a balance at all because you end up paying interest on the balance which is money that you could use for other purposes such as paying off other loans and/or saving for your future.
  4. Always go through your statements to make sure there are no extra charges either in fees or from unauthorized charges by hackers, etc. Remember to stick to your budget and don’t spend more than you should just because you have access to more credit. 
  5. Always keep in mind that banks and credit card issuers are there to make money. They may use beautiful enticing language like ‘0% introductory APR’, ‘spend and not worry about tomorrow’, etc… but at the end of the day a lot of people have overspent by using credit cards and found themselves carrying large balances being financed at very high interest rates. So, know what your plan is and stick to it no matter how much you feel the urge to splurge and “build credit” or “get more points”. 

If you follow the above, you’ll definitely build your credit scores. When you get those high scores, continue doing what got you those high scores. Like most coaches tell their players “stick to the fundamentals”. Yap, stick to what got you there in the first place and continue doing the same to maintain the high scores.

Best wishes to you as you embark on the great journey of building and maintaining high credit scores.

Patrick Nganga, MBA is a licensed insurance advisor based in Dallas, TX. He has been helping families and small businesses have financial peace of mind since 2004. 

He specializes in health insurance both under Obamacare and private plans, Medicare, Long-Term Care, Life Insurance, College Funding and Retirement Planning.

He can be reached at 405-361-5391 or patoinsurance@gmail.com

Disclaimer: The views and contents contained in this article are those of the guests. They are to guide and not necessarily a blue print to financial freedom and raising your credit score. If however you feel you can gain from the reading and have a question, please direct it to the author.

 

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