Building credit can be difficult to do when you’re a young person. Lenders usually don’t like giving out loans to people who haven’t demonstrated an ability to be responsible with credit.
But there are some steps you can take to build your credit up slowly over time if you’re willing to be patient. The fastest way to build credit is by figuring out a way to get your hands on a credit card and then using it responsibly over the course of a year or two.
You may have a tough time getting access to a credit card in the first place. But once you’re able to do it, it’ll give you an opportunity to build your credit up month after month.
Here is how to improve your credit score by putting a credit card to good use.
Find the Right Credit Card
As we just mentioned, it’s not always easy for a young person or someone with good credit to qualify for a credit card. Many credit card companies get gun-shy when it comes to handing out credit cards to those without good credit scores.
But there are some options for those young people or people with bad credit who want to obtain credit cards. You can:
- Try applying for a secured credit card
- Get an unsecured credit card by getting a co-signer for it
- Look specifically for credit cards aimed at those with no credit or bad credit
This page breaks down one great option for those who are interested in using a credit card to build up their credit. It might take you a little while to find the right credit card, but there are credit cards out there that would be perfect for you.
Make Credit Cards Payments on Time
Once you convince a credit card company to give you a credit card, don’t let them down! The last thing you want to do is rack up a huge credit card bill…and not be able to pay it off every month.
Most credit card companies will ask for a minimum payment every month on a portion of your total credit card debt. It’s extremely important for you to pay that minimum amount off by the due date.
If you don’t make even just a single payment on time, it could take a huge toll on your credit score. You could do more harm than good with a credit card when you don’t pay your bill.
It’s best for those trying to build their credit to keep their balances as low as they can at first. This will make their minimum payments more manageable at the start.
Avoid Using Too Much of Your Credit Card’s Available Balance
Keeping your credit card balance low will make it easier for you to pay it. It’ll also help you avoid utilizing too much of your available credit at one time.
Credit card utilization plays a huge role in your credit score. If the credit bureaus see that you’ve maxed out a credit card, it will often result in your credit score taking a nosedive.
If you’re going to max out or even come close to maxing out your credit card, have a plan in place for how you’re going to bring your balance back down quickly. It’s best to use no more than about 30 percent of your available credit at any given time.
Request Credit Card Limit Increases Every So Often
When you first get a credit card designed for those with little to no credit, it’s likely going to have a low credit card limit. You might only be able to charge a few hundred dollars at first.
As long as you make payments on time, your credit card company will likely increase your credit card limit on their own over time. But if you don’t feel like waiting for them to do it, you can always request an increase yourself.
Your credit card company might decline your request. But they might also scan through your recent activity and agree that it’s time to bump up your available credit.
Keep Your Credit Card Account Open
The longer you have a credit card in your possession, the better it is for your credit. Credit bureaus love to see people who have had credit cards for more than a few years.
At some point, you might find that you’re not using your credit card much. But even if that’s the case, you should not close it down at any point.
Keeping a credit card account open will help your credit card utilization and increase the age of your credit at the same time.
Apply for Another Credit Card Down the Line
Generally speaking, you shouldn’t try to apply for too many credit cards at one time. This can bring your credit score down and make you look risky to lenders.
You should, however, think about applying for more credit cards down the line once you’ve proven to be responsible with your first one. Studies have shown that the average American has about 2.6 credit cards, and by adding another credit card to the mix, you’ll send your available credit even higher.
This will have a positive impact on your credit score. As long as you don’t get into the habit of racking up big balances on multiple credit cards, having more than one credit card can work wonders for your credit history.
It’s the fastest way to build credit in a short period of time.
Take Advantage of the Fastest Way to Build Credit
Some people have a negative perception of credit cards. They think that those who have them are irresponsible with money and only have credit cards to buy things they can’t afford.
But when credit cards are used the right way, they’re the fastest way to build credit. You can achieve an excellent credit score by taking advantage of the credit cards available to you.
Check out our blog for more information on obtaining credit cards and using them to build credit.