Credit Cards: Make Them Build Your Credit Score
Credit cards are nothing but financial tools. If used wisely, they can help you building a good credit score that will unlock the door to a big loan in the future
Credit cards are nothing but financial tools. If used wisely, they can help building a good credit record that will unlock the door to a big loan in the future, if you are thinking on purchasing a house or starting your business.
In the other hand, without responsibility, credit cards may turn your credit down and make you lose time and money trying to repair your finances.
Common Mistakes That People Makes With Credit Cards
People usually tend to spend more than what will be able to pay and this is the first step into debt. Even when it is OK to use a credit card to buy something that you really would like to have, you should not go through life buying everything you would like to have. The fact of having a big limit in one or many of our credit cards does not mean that we actually own that money, so the best thing to do is putting a limit to our monthly expenses and try to live within that budget.
Missing bills' deadlines is extremely harmful to your credit's health. You should figure this as if every bill you forget to pay lows one point of your credit. This may not seem important if you have forgotten to pay a bill this month, but think about how many points will you lose in your life for each late payment.
Filling in every form that we are offered to, is another common mistake. We are not always paying attention to what are we said about interest rates, fees and other charges, and most of the time we receive and use a new credit card in addition to those that we may already have, without thinking about the consequences. This is easy to avoid just by reading all terms and conditions before signing for a new plastic.
How To Use A Credit Card To Build A Good Credit Record
If you had never have a credit card before, it will be better for you to choose a secured card as your first credit card. Taking a secured credit card you will be asked to deposit a certain amount of money that will work as your credit limit. This may be boring at first, and you may feel a little uncomfortable to have a limit on your expenses, even more if you have a job and your incomes allow you to have an unsecured credit card. Why to start with a secured credit card then? It will teach you a good financial behavior. You will not be able to spend more than your limit allows you and you will not miss a deadline, since your deposit may be taken as a payment for the lender company. Of course, if this happens, you will have to do the deposit again to be available to use your credit card.
Once you feel comfortable handling with your credit card's payments and you have learned to keep your expenses within a certain budget, you may want to apply for an unsecured credit card. If you have made no mistakes with your secured credit card, you will have already got many good points for your credit record, so you will be able to apply for a very good credit card. This means that you should take your time to evaluate what do financial companies have to offer to you before filling and signing any credit card form.
Unlikely prepaid credit cards that have no influence at all, secured and unsecured credit cards contribute for good or bad to your credit score. If you have sense when using them, you will have constructed a good credit record by the time you decide to apply for a bigger loan.
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ABOUT THE AUTHOR
Sarah Dinkins is a financial advisor who has been associated with Guaranteed Bad Credit Loans since long ago. To find Personal Loans, Guaranteed Unsecured Credit Card, and others visit http://www.badcreditfinancialexperts.com