It’s important to consider how your credit card expenses can affect your credit score. If you’re a novice, credit cards can be hard to understand with all the fine print, different rewards and interest rates. Don’t fret, AstroWealth is here to give you a rundown on how to start building credit.
As an adult, your ability to be able to finance a car, take out a loan or apply for a mortgage all depends on your credit score. If there is one thing you need to understand, it is that it is nearly impossible to build without a good credit score. Credit cards are the best way to do that. Credit cards allow you to create a credit history through your timely monthly payments on any transactions that are made.
AstroWealth is here to provide you with the insight to make an informed decision about your credit card choices and help you to start building credit.
Top 6 Tips to Start Building Credit:
1. Where to apply
Banks are the number one source of reliable credit cards with lower interest rates. If you’ve been banking at a financial institution, consider talking with an advisor on any pre-approvals for a credit card. They analyze any income you have flowing into your account and can automatically suggest a good card suiting your specific needs.
2. Applying for a Credit Card without an approval is not always the best option
One important thing to consider when you apply for a credit card without a pre-approval is that a rejection can sometimes negatively impact your credit history. Either wait for a pre-approval or consider getting a third party credit card where they are likely to approve you.
3. You don’t need a high credit limit to survive
Only accept a credit limit amount that matches your monthly spending habits. The most common mistake credit card holders make is not paying off the full amount on the credit card every time. Next month, you will have interest on the previous amount and the new amount. When you choose the appropriate credit limit based on your spending habit, you are more likely to be able to pay it all off on a monthly basis. This will increase your chances of building good credit history.
4. Pay the full amount as often as you can
This point relates directly to the one above. If you don’t already know by now, you should always pay off the full amount each month to ensure you don’t get into the habit of carrying over balances and remaining in debts. To emphasize, do not just pay the minimum amount – to maintain a high credit score, you need to responsibly spend and pay it off at the end.
5. Get a low annual fee credit card
It’s often a misconception that all credit cards charge outrageous annual fees. While there are credit cards that do, many starter friendly credit cards offer a low to no annual fee. As long as you pay on time, you should have no interest charges and keep your credit hassle free.
6. Take advantage of any rewards
Rewards are a big deal, especially to all of us at AstroWealth. We want to help you save big money and earn cash back. Many financial institutions also want the same. If you are a student or someone that typically uses your credit card when you spend money, make each purchase count. Reward focused credit cards will give you cash back in categories such as gas, groceries, restaurants and even coffee.
Now that you have all this knowledge, you are set up for success. Spend only on what you can afford and make sure to pay off your balance every month to get the highest credit score possible. You can get closer to buying your dream car, home or anything else when you start building credit with these tips from AstroWealth.
Join AstroWealth today to earn Cash Back when you shop online or activate a partner offer. Check out our blogs if you want more information on how to start building credit, or need some tips from our financial guides.