Viral.D
New member
How to get a credit card, why you should care, what factors increase your credit score, and how that can ultimately help make you money. I got my first credit card at 21 years old, after banks turned me down for a loan on real estate - this is from my experiences building my own credit.
Your credit score shows banks how responsible you are with your money. The scores range from about 300-850, with the best rates being available to those who have a score above 740. It shows banks how likely you are to potentially default on a loan and they adjust their interest rate according to their risk.
They calculate your credit score based off several factors:
Now keep in mind, a credit card is something to use responsibly. Just put a normal amount on the cards each month as you would cash or a debit card, and pay it off in full. That’s it. It’s really, really simple. Eventually you can take advantage of great credit card rewards that’ll get you free trips and perks. Look up credit card churning for more information.
Your credit score shows banks how responsible you are with your money. The scores range from about 300-850, with the best rates being available to those who have a score above 740. It shows banks how likely you are to potentially default on a loan and they adjust their interest rate according to their risk.
They calculate your credit score based off several factors:
- -Length of credit history - the longer you’ve had it, the higher the score
- -How much credit you have available to you - the more money you have available, the higher the score
- -How much of it you actually use - the less money you use, the higher the score - this is called utilization rate
- -On time payments - if you’ve never had a late payment and always pay on time, the higher the score
- -The diversity of loans you’ve had - if you have variety of credit cards, auto loans, home loans, the higher your score.
- -Total inquiries - this means that every time you apply for a loan or credit card, it’s marked. The more times you apply, the higher risk you’re seen, since people who apply for a lot of credit in a short amount of time might be desperate for money, so this temporarily lowers your score. But lets not worry about this since for most people just starting, it won’t make a difference.
- -You do NOT need to pay interest to increase your credit score. Pay it off in full, you do not need to keep a small balance each month.
- -It does NOT hurt you to check your own credit score. I use Credit Karma regularly to keep track of my score and where it’s at.
- -It’s also false that having too many cards will decrease your score - the opposite is true. The more credit you have available, generally your debt-to-credit ratio will be a lot lower, which will increase your score.
- -Do NOT close out a credit card, especially if it’s an old account. When you close a credit card, it also closes all that credit history - which is a huge component of a good score. Keep your credit cards open even if you don’t use them, or if you pay an annual fee, see if they can downgrade the card to a free account.
Now keep in mind, a credit card is something to use responsibly. Just put a normal amount on the cards each month as you would cash or a debit card, and pay it off in full. That’s it. It’s really, really simple. Eventually you can take advantage of great credit card rewards that’ll get you free trips and perks. Look up credit card churning for more information.