In 2018, the average credit card debt was around $5,000 per user.
Credit cards can be convenient, but with great power comes great responsibility.
It won’t happen overnight, but it’s possible to improve and build credit with credit cards. Learn about different strategies to do this here.
Pay Your Bills on Time
One of the most important things when using a credit card is to pay your bills on time.
When it comes to calculating your credit score, your payment history comprises 35% of that credit score. If you’re not paying your debts and bills on time, then it’s going to be difficult to get your credit score up to where you want it to be.
This tip is simple enough. You don’t have to pay off the entire card; just pay off the statement balance every month and you’ll be good to go.
Use It Like a Debit Card
One tip to making it easier to pay off your debt every month is to use your credit card as if it was your debit card.
With credit cards, it can be easy to spend money on things you don’t really have the money for. But if you only buy stuff that you know you have money in the bank to pay for, then you will be able to build credit with credit cards easily.
Make a Budget
It can be difficult to keep track of how much money you’re spending and where it’s all going.
Having a budget and sticking to it every month can help you know when you’re about to hit that limit of spending too much for the month.
If you’ve never had a budget before it can be a hard habit to get into, but it will benefit you in the long run.
Keep Balances Low
When you have a credit card, you want to try and keep the outstanding balances as low as possible.
Your credit spending should only account for a certain percentage of your limit each month.
In addition, having a lot of debt sitting on your credit cards that you haven’t paid off will also affect your score.
Don’t Open a Bunch of New Credit Cards
You might think that having a bunch of credit cards open will help your score, but in reality, it can actually hurt it. This could actually lower your score.
Only apply for a new credit card account if you absolutely need it.
If you have bad credit and can’t get a new card, check out these cards to learn more.
On the flip side of that, don’t start closing credit card accounts that you don’t use anymore. You already have them open, and even if you don’t use them it’s still accounting for some of your credit balance.
It could actually hurt your score to close it at that point as well.
Check Your Credit
To fix your credit, you need to learn how to check your credit.
You can use a free credit report which can you get from a website. On this report, you may not be able to see your credit score, but you can see different things that may be affecting your score.
Knowing these will help you be able to fix it.
Use These Strategies to Build Credit with Credit Cards
These are a few tips to help build credit with credit cards.
Having a good credit score will help you later on, especially when applying for loans.
For more tips on how to get rid of bad credit, read this blog post.