Established credit history can help you buy your first car on loan, rent an apartment without having someone co-sign, or refinance your student loan. Given this, getting a credit card is a good first step to start building a credit history. Here are some steps to help you build a high credit score with your first credit card:
Check whether you are old enough to get a credit card
The minimum age to get a credit card is 21 years. However, if you think you can handle a credit account, consider opening one earlier with a co-signer or guarantor.
Consider getting a secured credit card
When you are just starting off, you may not be eligible to get high-end cards with fantastic perks and rewards. However, you can get a secured credit card for which you will need to put down a security deposit. Your credit limit will likely be equal to the security deposit.
Don’t skip monthly payments
If you miss your monthly payments, your lender may report the payment defaults to the credit bureaus, which may then negatively affect your credit score. So, to keep this from happening, set up a reminder to help you make the payments on time.
Keep your credit utilization low
Your credit utilization score has an effect on your credit score. If you have a high credit utilization score, your credit score may drop. Given this, try to keep your credit utilization low even if you have a large credit limit available.
Don’t open multiple credit accounts in a short span
Remember that credit providers will do a hard check into your credit history each time you apply for a credit card. So, although it may be tempting to open multiple accounts for different perks, it’s important to not make multiple applications at the same time.
Ask for an increase in credit limit
If you’ve been able to make your monthly payments without any trouble for at least a year, you can consider asking your lender for an increased credit limit. This will positively impact your credit score.
Your credit card is an important financial tool. So, make sure to use it the right way to build your credit history.