Can’t you take advantage of banks’ advantageous offers because your credit score is not strong enough? Well, this is not just a problem you have. To tell you the truth, it takes a few tricks to build credit and make yourself a favorite client for banks. In this content, we will talk about these tricks. You can create an extremely high credit for yourself using only your credit card.
- 1 What To Be Careful To Build Credit Score By Using Credit Card?
- 2 TOOL 1: Secured Credit Card To Build Credit
- 3 TOOL 2: Student Credit Cards to Build Credit
- 4 So, How Is Credit Score Calculated?
What To Be Careful To Build Credit Score By Using Credit Card?
If you have a credit card and want to build and increase your credit score quickly, be careful about the following:
Pay Credit Card Statements On Time.
Overdue debts are excellent reasons banks may not trust you. The minimum payment amount for your credit card is created each month. This amount is a very small part of your total debt. What you have to do is pay this minimum debt amount, and forget about the ‘’total rate’’ until the next month. Your credit score for the remaining debt will not cause the credit score to decrease. But remember that you have to pay the minimum amount of payment at the right time each month.
A small tip: You should pay attention to this for all your credit cards. When you apply for a credit card or loan to bank X, your credit score is determined by the entire payment history of your credit cards.
Do not make too many credit card or credit applications
When you need money but you know that your credit score is not enough to have credit, it is not wiseful to apply, apply and reapply and get rejections. The best way to build credit is to play the whole game by its rules and then wait for a while.
If you have outstanding debts, it may make sense to close them all at once.
Paying off all your outstanding debts will make your financial statement move toward positive. Payment history is 35 percent effective in determining your overall credit score. Amounts owed, on the other hand, has a value of 30 percent. As such, it seems like it’s not a good idea to take a cash advance or apply for a loan to pay off your credit card. Use credit cards to build credit, but first, try to pay your debt with your cash savings. Then take smaller and more confident steps to get financial support.
TOOL 1: Secured Credit Card To Build Credit
Secured credit cards at the initial stage can be a good option if you want to build credit for yourself. These card options are specially designed for those who want to increase their credit score. These options have the following features:
- The functions of these credit cards are exactly the same as standard cards.
- When you open your account in the bank to which the card is linked, you must pay a refundable security deposit to the issuer.
- These cards may have higher fees than others.
- These credit cards may have relatively fewer options as membership benefits. For example, you may not able to have cashback or extra discounts.
- Despite the disadvantages, these cards are extremely good options for those who want to find a credit card to build credit.
TOOL 2: Student Credit Cards to Build Credit
If you are still a university student and you have always met your financial needs with cash or debit cards, it is really natural that your credit score has not been formed. If you want to overcome this situation, how about using advantageous student credit cards?
- Only students can use these cards.
- The dues for the cards are extremely low or they are not required.
- These cards could provide extra discounts in bookstores or restaurants that students use frequently. Therefore, students who want a built-in credit rating use these cards even if they do not need it.
So, How Is Credit Score Calculated?
What should you look for to ensure that your credit score is always strong and sufficient for you? To determine this, it would be more logical to determine which factors affect the credit score.
Factors Determine Credit Score
According to the statement made by FICO,
- Payment History is instrumental in determining 35 percent of your credit score.
- In addition, debts you receive from banks as cash advances or loans have a 30 percent effect.
- Your credit history lenght is about how long you have had financial independence and your financial stability. This factor is also 15 percent effective. Therefore, using a credit card, even if it is a student card, can be a good method.
- New credits are 10 percent effective.
- The credit mix is our last factor that is ten percent effective.