Building Your Credit

If you have poor or no credit, credit cards are a great way to build your credit. They’re also a great way to get into trouble with your credit if you abuse them. Careful management of your credit card is vital to building up your credit score. Some options are ideal for building your credit while others will do nothing but bring you further into debt through outrageous interest rates and fees.

Having a bankruptcy on your record doesn’t mean you can’t get a credit card. It does mean that you will pay more for one. However, you will not be limited to just one offer in most cases, so shop around and figure out which offer you think you could get that would be the best for you, then apply for it.

You can do a bit better on interest rates if you can bring your level of debt down. A high level of debt is one of those things that makes you appear to be a higher risk, and companies therefore will charge you more for the use of a credit card. If possible, pay down your debt before applying for a credit card.

Don’t be afraid to ask for help. If there’s someone in your family who is good with money, they probably can give you some very good advice on how to improve your credit. Changing your habits is rarely comfortable, but if you want good credit it is necessary.

You need to look at why you want to build your credit. Being aware of your motivation can help you to use it to reach your goals. Also ask yourself if you are ready for the responsibility of a credit card. Making payments on time isn’t easy if you haven’t had the habit before.

When you decide to apply for a credit card, read all terms and conditions carefully. These will determine how much the credit card will cost you and when you need to make payments. Make sure you understand what each card is offering. Rewards sound great, but if you carry a balance the higher interest rate and/or fees rewards cards often carry will likely outweigh any benefit you would gain from them.

If the only credit card you can get approved for has a high interest rate it may be in your best interest to accept the card. Prove that you can handle it for a few months, then call and ask if you can get a lower interest rate. It may take a few tries over several months, but once the company is satisfied that you will be a good customer they are more likely to be willing to give you a lower rate. Wait about six months before the first time you ask for a lower rate, but if you don’t get it then, either start applying for a different card (and tell your current company you will do so!), or ask again in a month or two. This is not something where you should take “no” for an answer too quickly. But if you have been late paying even once, don’t expect to get a lower rate. You must prove yourself a valuable customer!

Building your credit is not easy, especially if you have had bad habits in the past, but it’s something you need to do. Bad credit can keep you from buying a home and some employers check your credit rating too, on the theory that someone with poor credit is a higher risk in other areas too. It isn’t always fair, but it is a fact of life.