Credit cards are often the culprit for large amounts of debt, but they can also serve a positive purpose when it comes to your credit. If you know how to do it right, you can use a credit card to build a nice credit score.
According to Experian, you can open your own credit card or become an authorized user on someone else’s credit card account to start building your credit. There are two keys to managing your credit card once you have one: keep a low balance and pay your bill on time every month.
Keep a low balance
Good credit requires that you are not too much in debt. If you run your credit card balance up to the limit, it will have a negative effect. By keeping your credit utilization low, it will benefit your credit without hurting it. Aim to make sure that you never go above 50%. A good goal is to keep it at 10%. You may need to pay off large purchases right away to keep your balance low. An additional tip is to always pay more than the minimum balance to keep y our utilization rate low.
Pay on time
Timely payments go a long way towards boosting your credit. When you miss a payment, it causes a big hit against your credit. Never miss a due date, and if you think you might, contact your credit card company beforehand to see if you can set up an arrangement. It may help to set up autopay so you do not have to remember to pay each month.