Tag: Building Credit

Should You Get Another Credit Card? What to Consider

A woman looks at her laptop computer with a thoughtful look on her face.

Credit cards play a significant role in your financial life—from establishing credit and determining your buying power to potentially being a financial lifeline during times of crisis.

Before you add another credit card to your wallet, you should consider your buying habits and financial strategies. The answers to the following five questions may help you decide if another credit card is right for you.

New Cardholder? Wait a Year

If you’re a new cardholder, try holding off for one year before applying for another credit card. It can take six months to a year for your card usage to affect your credit score.

Without an established credit history, it may be difficult to get lenders to extend you credit. A short credit history can also impact your interest rates, keeping them higher than desirable. If you’ve had your credit card for less than a year, getting a new one may not be the best choice right now.

What to Do

Be patient. Use your current credit card on a regular basis and pay on time and in full each month. Your payment history is the largest factor that determines your credit score. When you do apply for a second credit card, the lending company will see how responsible you’ve been. They will then be more likely to extend you credit with a lower interest rate.

Trying to Build Credit? One Card May Be Enough

If you want another card because you’re trying to build your credit, one card may be enough. The most important part of building credit is using your existing accounts wisely—not adding more. Two cards could improve your credit utilization ratio, as long as you don’t rack up debt on either card. And if you don’t plan on actually using your second card, keep in mind that some credit card companies have a policy of canceling credit cards due to inactivity—and a canceled credit card can cause your credit score to take a dip.

What to Do

Instead of getting a second card, focus on using your current cards more effectively. Pay your balances on time and in full to help improve your credit score. If you’re ready to open a new type of account to increase your account mix, consider a small personal loan.

Already Have Multiple Cards? Review Your Payments

It may be tempting to have more spending power at your disposal, but before you apply for another credit card, make sure you can financially handle it. Examine how you’re currently managing your credit cards.

Are you struggling to pay the minimum each month? Are you unable to make payments on time? If you answer “yes” to either of these questions, it’s probably not a good idea to apply for another card right now.

What to Do

If you’re already having a hard time paying your credit card bills, ask yourself why you think you should get another credit card. Is it because you’ve already maxed out the cards you have in use? Don’t open yourself up to more debt by opening another line of credit.

Instead, develop a plan to lower your current credit card balances and create a budget to help organize and control your spending. A balance transfer credit card may be a solution if you’re looking to consolidate your debt into one, easy-to-track payment plan.

TD Cash Credit Card

Apply Now

on TD Bank’s secure website

Card Details
Intro Apr:
0% Introductory APR for 6 months on purchases


Ongoing Apr:
12.99%, 17.99% or 22.99% (Variable)


Balance Transfer:
0% Introductory APR for 15 months on balance transfers


Annual Fee:
$0


Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn $150 Cash Back when you spend $500 within 90 days after account opening
  • Earn 3% Cash Back on dining
  • Earn 2% Cash Back at grocery stores
  • Earn 1% Cash Back on all other eligible purchases
  • $0 Annual Fee
  • Visa Zero Liability
  • Instant credit card replacement
  • Digital Wallet
  • Contactless Payments

Card Details +

Running a Balance? Check the Interest Rates

Carrying a balance from month to month can affect your credit score by increasing your utilization rate. It can also put a big dent in your wallet depending on your interest rates. If you regularly make your monthly minimum payments but keep a balance, it could be beneficial to get a new card with lower rates—as long as you can use it responsibly. If you want to keep your old card active, split the same amount of spending between the two cards, rather than doubling your spending, and your utilization rates and fees could go down.

What to Do

Check the interest rates on your current card. If you’ve been keeping up with your payments and your overall credit score is good, you could qualify for a better interest rate to replace this one with. While some credit cards may hit everything on your perk and benefit checklist, if the interest rate is too high, skip it. Look for credit cards with low interest rates that will be sustainable for long-term use.

Got Excellent Credit? Try a Rewards Credit Card

If you have established excellent credit, you may be receiving offers from a variety of credit card companies. If you know that you can financially handle another credit card and are looking to take advantage of the many perks and rewards available, you may want to consider applying for another credit card.

What to Do

Before you move forward, do your research on each one. Don’t get taken in by flashy offers that won’t benefit you in the long run. The best perks and rewards are the ones that suit your lifestyle. Decide which are most important to you and would give you the most bang for your buck.

Chase Sapphire Preferred® Card

Apply Now

on Chase’s secure website

Card Details
Intro Apr:
N/A


Ongoing Apr:
15.99% – 22.99% Variable


Balance Transfer:
15.99% – 22.99% Variable


Annual Fee:
$95


Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.

Card Details +

Ready to Apply? Go for It

Once you’ve learned how your charging and payment habits can affect your credit score, you can determine if and when the time is right for you to get another credit card. Our Credit Card Finder makes it easy to find the best card for your needs.

Find Your Credit Card

The post Should You Get Another Credit Card? What to Consider appeared first on Credit.com.

Source: credit.com

The Best Things to Charge on Your Credit Card When You’re Rebuilding Credit

Charging a few small, easy-to-pay-off items to your card each month can help you rebuild credit.

If your credit needs rehabilitation due to late payments, accounts in collections or other negative items, it might be time to rebuild. Rebuilding your credit requires an understanding of your current situation, identifying past mistakes and implementing the right strategies going forward.

Wise use of a credit card is one way to start. Surprising, right? But if you use that plastic correctly, it really can help you. Good credit card strategies include keeping a low balance, making payments on time and paying your balance in full each month. To do that, it’s best to start small and only charge things that won’t kill your credit building project before it takes off. (You can check on your progress with a free credit report snapshot on Credit.com.)

Here are a few things you can charge on your credit card to help you boost that score.

Gas

The cost of gas can add up, but if you already have room for gas in your monthly budget, you can charge your gas expenses and pay them off in full using the funds in your bank account. Some credit cards offer special cash back rates on gas purchases so you can earn a little money back in your wallet (although getting a new unsecured credit card might not be the best move for you at this stage as the inquiry will cause your score to take even more of a hit).

Groceries

Groceries are another staple you likely already have built into your budget. Instead of handing over cash or a check when you pick up the necessities for the week, charge your groceries to your credit card and pay those purchases off in full each month. There are several credit cards on the market that offer special cash-back rates on groceries, as well.

Streaming Services

Monthly streaming services usually cost less than $20 a month. You could conceivably set up your credit card to pay for a streaming service, pay it off in full each month and never use it for anything else.

Balance Transfers

If you have a large balance on a high-interest credit card, it could be damaging your credit score and affecting your ability to make your payment. If you have a lower interest credit card, you can transfer the balance and reduce the interest. If you can qualify, a card with a long 0% intro APR period can help you pay your balance off interest-free.

(Cheap) Dining & Recreation

It’s probably not a good idea to use your credit cards at the club or restaurants, as it’s easy for costs to spiral out of control. But if you’re on a date at the movies or taking the kids out for mini golf and milkshakes, low-cost dining and recreation purchases might be a safe bet.

Small Everyday Expenses

Sometimes you have to run into a local store for a roll of duct tape or some socks. Small everyday purchases can be fairly easy to pay off in full.

Using Your Credit Card Wisely to Build Credit

For the most part, small purchases you can afford to pay off each time the statement arrives are the best things to put on your credit card, as payment history is the biggest influencer of your credit scores. Plus, carrying a balance means you’ll be hit with interest and it will take you longer to pay down your balance.

But even relatively small purchases can threaten your credit if they pile up too quickly. (Credit experts recommend keeping your credit utilization ratio — that is, your amount of debt in relation to your credit limit — at 30%, ideally 10%.) So, a good practice is to treat your credit card like cash and only purchase things you can cover with available funds.

Have any questions about improving your credit? Ask us in the comments below and one of our credit experts will do their best to help.

Image: bowdenimages

The post The Best Things to Charge on Your Credit Card When You’re Rebuilding Credit appeared first on Credit.com.

Source: credit.com

How to Start Building Credit Once You Turn 18

Good credit is crucial to unlocking many financial opportunities in life. When you have a great credit score, you can get lower interest rates on car loans, credit cards and mortgages. Some employers and landlords even check credit reports before they make a job offer or approve a resident application. While developing a solid credit history takes time, follow some of these tips on how to establish credit once you turn 18 to get started as soon as possible.

1. Understand the Basics of Credit

Make sure you understand the basics of how credit works. Your credit reports are maintained by three major credit bureaus—Experian, TransUnion and Equifax. It contains data on your current and past debts, payment history, residential history and other facts. This data is supplied by lenders, creditors and businesses where you have accounts.

The information contained in your credit report determines your credit score. Higher credit scores are more attractive to lenders and creditors. The factors that influence your score include:

  • Payment history, which is whether you pay your bills on time
  • Average age of accounts, which is how long you’ve had your accounts open
  • Credit utilization ratio, which is how much of your open credit line you’re currently using
  • Account mix, which demonstrates that you can responsibly manage multiple types of accounts
  • Inquiries, which occur when you apply for new credit

As a new adult, some of these factors may not currently apply to you. However, they can all negatively or positively affect your score, depending on your behavior as a consumer. Educating yourself on credit now helps you avoid costly mistakes in the future.

2. Monitor Your Credit Report and Credit Score

Now that you understand the basics of building credit, you need to start monitoring your report and credit score. Monitoring your credit is one of the best ways to learn what will positively or negatively impact your scores. It also helps you catch inaccuracies or signs of identity theft sooner.

You can check your credit report for free annually with each major credit bureau. As you review your report, look for any negative or inaccurate information that could be screwing up your credit. You can also check your credit score, updated every 14 days, for free at Credit.com.

If you’re really serious about understanding your credit reports and scores, sign up for ExtraCredit. With Track It, you can see 28 of your FICO scores and credit reports from all three credit bureaus.

3. Sign Up for ExtraCredit

ExtraCredit does more than just show you your credit scores. Have you recently started paying rent or utilities? BuildIt will add them as new tradelines with all three credit bureaus. That means you’ll get credit for bills you’re already paying—building your credit profile each month.

Sign Up for ExtraCredit

4. Become an Authorized User

If you have a friend or family member willing to add you as an authorized user on their credit card, you can piggyback off their credit card activity to help establish your credit. Even if you don’t use the card, the account can still land on your credit report and potentially positively impact your score.

This method poses some risks to the primary cardholder and you, the authorized user. If you or the primary cardholder rack up too much debt or miss payments, that activity could end up damaging the credit of both parties.

You should also verify that the credit card company in question reports card activity to the credit file of authorized users. If they don’t, your credit won’t see any benefit.

5. Get a Starter Credit Card

Credit cards are one of the best tools around for building credit, but you might have trouble qualifying for one when you have no credit history. Luckily, there are a few credit card options for young people with little or no credit.

Unsecured Credit Cards: If you don’t have the money to make a security deposit, consider an unsecured credit card such as the Avant Credit Card. This card offers a process that presents you with a credit line based on your creditworthiness before you apply. It also has no penalty or hidden fees—a perfect fit for any young adult’s starter card. You do need at least some fair credit history to be approved, though.

Avant Credit Card

Apply Now

on Avant’s secure website

Card Details
Intro Apr:
N/A


Ongoing Apr:
25.99% (variable)


Balance Transfer:
N/A


Annual Fee:
$39


Credit Needed:
Fair

Snapshot of Card Features
  • No deposit required
  • No penalty APR
  • No hidden fees
  • Fast and easy application process
  • Help strengthen your credit history with responsible use
  • Disclosure: If you are charged interest, the charge will be no less than $1.00. Cash Advance Fee: The greater of $10 or 3% of the amount of the cash advance
  • Avant branded credit products are issued by WebBank, member FDIC

Card Details +

Secured Credit Cards: A secured credit card requires an upfront security deposit to open. Your deposit will typically equal your initial credit limit. For example, a $500 security deposit would get you a $500 credit limit. These cards are easier to qualify for, and you can use them to make purchases, just like traditional credit cards, while also establishing some credit history.

OpenSky® Secured Visa® Credit Card

Apply Now

on Capital Bank’s secure website

Card Details
Intro Apr:
N/A


Ongoing Apr:
17.39% (variable)


Balance Transfer:
N/A


Annual Fee:
$35


Credit Needed:
Fair-Poor-Bad-No Credit

Snapshot of Card Features
  • No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
  • The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
  • Build credit quickly. OpenSky reports to all 3 major credit bureaus.
  • 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
  • We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
  • OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
  • *View our Cardholder Agreement located at the bottom of the application page for details of the card

Card Details +

6. Make Payments on Time

Making timely payments is the most important thing you can do to build credit, as payment history makes up 35% of your credit score. This applies to credit cards, loans, utilities such as cell phone services and any other account that requires a monthly payment. No matter the account type, a late or missed payment that lands on your credit report can do significant damage to your credit score.

7. Maintain a Low Credit Card Balance

Your credit utilization ratio, or the amount of available credit you have tied up in debt, is another major contributor to your credit score. Most experts recommend keeping your credit card balances below 30% of the available credit limit. Ideally, you should pay your balance off in full each month to avoid interest and keep your utilization low.

8. Get a Loan

Getting a loan just to build credit is generally not a good idea, as you shouldn’t take on debt only for the sake of your credit score. But if you have a valid reason, such as needing a car or money for college, a small loan in your name can help you build credit.

As with credit cards, loans only build a good credit history if you pay them on time every month. You also want to ensure your creditor reports payments to the credit bureau. If you also have a credit card, getting a loan can help improve your account mix, which makes up around 10% of your credit score.

9. Keep It Simple for Now

The more credit cards and loans you open, the higher your chances are of falling into debt. When you’re just starting out, you should probably play it safe and manage one basic credit card and/or small loan until you get the hang of things. Trying to manage too many debts at once could get you in over your head.

Over time, you can start to add other credit cards or loans to the mix, diversifying your credit profile and adding more opportunities to build credit. And because the age of your accounts affects your credit score, just keeping accounts open will help you build credit history in the long run. When you’re starting to figure out how to build your credit, do it slowly, carefully and with a constant eye on your statements and credit reports.

The post How to Start Building Credit Once You Turn 18 appeared first on Credit.com.

Source: credit.com