Building your credit is important if you want to secure an advantageous loan for a home, car, or other big-ticket item. If your credit score is lower than it should be to help you get the financial gains you want, there are several ways to bump it up. The following methods will help you increase your credit score when using a credit card:
Be intentional with paying your balance
Paying off your balance in full is an amazing feat, but paying it off before it’s due can work wonders on your credit score. Since your credit score is calculated after your balance is reported to a credit bureau by the card issuer, the lower your balance, the better your credit utilization will be.
“A simple way to do that is to pay down the balance before the billing cycle ends or to pay several times throughout the month to always keep your balance low,” advises Bev O’Shea, writer for NerdWallet.com.
Know your numbers
Although credit reports are not exciting to read, they hold vital truths about your financial health. It is important to review your credit history to spot any irregularities or mistakes that may be working against you. It is also important to find out what you are doing right with your money management.
“Pull a copy of your credit report from each of the three major national credit bureaus: Equifax, Experian, and TransUnion. You can do that for free once a year through the official AnnualCreditReport.com website. Then, review each report to see what’s helping or hurting your score,” advises Rebecca Lake, writer for Investopedia.com.
Prioritize rewards in your credit card choice
There are many credit cards to choose from, but one that offers rewards will serve you better. Every time you swipe or hand over your card to a retailer, you are showing the issuer you are an active participant in the relationship.
“If you opened a rewards credit card, start using the card to make purchases that will earn you points, miles, or cash back. Little or no activity could result in the bank reducing your credit limit or closing the account, and your credit score could drop as a result,” according to Tanza Loudenback, writer for BusinessInsider.com.
Stay within your limits
In addition to paying your bills on time and your balance in full, you need to stay within spending limits to protect your credit score.
“Using more than 30% of your credit risks damage to your score. 1%-10% utilization will help your score the most. And, of course, don’t spend beyond your means, regardless of what your limit is,” advises Adam McCann, writer for WalletHub.com.
You can decrease your credit utilization percentage, even without changing your balance, by increasing your credit limit.
“If your income has gone up or you’ve added more years of positive credit experience, you have a decent shot at getting a higher limit,” according to O’Shea.
These tips will help you build credit when you use a credit card.