If you are thinking about applying for your first Credit Card or maybe you have not succeeded when you have tried before, read in this post some points that you should consider before making the application process so that your credit experience is positive.
Your first Credit Card can be the beginning to build your financial future , and how you use it could affect you for years.
Create a good credit score and you could see lower interest rates on loans for home and car, for example, and receive better Credit Card benefits .
Making too many mistakes with a first letter could mean having less financial flexibility
Owners, lenders and utility companies may see a low credit score as a risky customer for them and deny services or at least charge more for them.
How you handle your first Credit Card is important
Here are some ways to get it and use it wisely:
- If you have a stable income, obtaining your first Credit Card can be as simple as requesting it.
- If you are a student, some Credit Cards are intended for students, although they require the ability to pay debts or have a consignee.
- Some card issuers may demand that new clients have a good credit history, which sounds very contradictory. How can you be required to have good credit to get credit, if you do not have credit?
- But if you do not have an established credit history, you may have difficulty obtaining approval for a first Credit Card . However, there are options for newbies.
- Probably the easiest thing is to request a Credit Card from a store.
- These cards only allow you to use them to obtain credit in the same store that the card offers you. But buy some things with the card and pay the bill on time each month and your credit score will grow.
- Try not to leave a balance because the store’s credit cards are famous for charging high interest rates.
- Another way to establish a credit can be to join someone else’s credit account. If you can convince a parent or other family member with good credit to be a consignee with a Credit Card, then both can improve their credit scores if the card is used well.
- Both will be responsible if you do not pay the bill.
- Some banks allow you to acquire your first Credit Card when you become an authorized user with a Credit Card that one of your relatives already has. Your name is added to the account and you get a Credit Card to use.
- Paying the card on time as an authorized user will help you develop your credit, while late payments could affect your credit score and the main user’s score.
Recommendations to use your first card well
- Good habits can take a life to acquire them. However, establishing good credit card habits in advance should not be so difficult, and you will see how beneficial it is over time as your credit score increases.
- Start using only your new Credit Card for emergencies. Do not use it for daily purchases.
- Establish an emergency fund to which you automatically transfer money on the day of payment from your account, to pay for a broken car, hospitalization or other emergencies, and then pay the bill of the credit card in full.
- Once you have established an emergency fund and have a family budget to follow, add some recurring charges to your Credit Card. These can be a cell phone bill, utility bill, Netflix or other monthly payment.
- If you can handle those bills without problems, it means that you can pay them in full and on time every month, then it’s time to start making daily purchases on your credit card if they fit your budget.
- Paying your credit card bill in full every month and on time will mean you will not pay interest or late fees.
- Those two steps are the best thing you can do to increase your credit score. If you can not pay your bill in full each month, at least make the minimum payment and do not buy anything else until you have paid.
- Having a credit card balance is fine, as far as a credit score is concerned, as long as it is less than 30 percent of the total limit of your Credit Card.
- A higher debt-credit ratio can cause creditors to consider you a risk, since you may be spending more than you can afford.
- After obtaining your first Credit Card, you are likely to receive more Credit Card offers by mail from other credit issuers.
- They can offer all kinds of rewards and better rates than your current card. Do not look for them until you have established a good credit report for at least one year.
- Having too many credit cards can only complicate your finances and make it easier to spend excessively.
- Finally, read your credit card statement carefully every month. Look for fraudulent charges and other errors and inform your bank immediately.
Get in the habit of checking your credit report at least once a year from the three major credit reporting agencies to check for errors in your report.
Following these habits can help you establish good credit and keep it for the rest of your life, providing cheaper financial products as you approach other firsts.