Build Your Credit and Your Wealth
Many people do not make it past the first time they apply for a credit card. This is normally due to a lack of credit knowledge. By building your credit before attempting to apply for a card you will save yourself the hassle of trying to repair your credit after the fact.
The only way to build credit is by paying your bills on time and not over-extending yourself. When you apply for a credit card, you will also want to check your credit history to make sure there are no discrepancies. Disp frigations on your credit report may affect you when you apply for a mortgage, car loan or even a line of credit. Knowing if there are inaccuracies is very important, and for that reason you should do your research before applying.
There are a few common mistakes people do not realize they’re making that can lead to poor credit reporting. These include:
Many of these things can be corrected to improve your credit score. After all, you can never have too much credit knowledge. Paying bills on time and not over-extending yourself is important, and it’s something you should consider signing up for.
Paying off your bills too quickly.While it is important to pay off your bills, if you are paying bills too quickly it can appear to creditors that you are having difficulty meeting your financial obligations. An example of this is if you pay off your credit card in six months and then you apply for a new credit card that requires a high interest rate. Your credit score can plummet just by missing six months of credit card payments.
Charging your credit card too high.If your charge card is maxed out, and you apply for a new credit card, it can affect your credit score. The reason is that your debt to limit ratio is considered. The more of your available credit that you have used, the more of your debt you’re over-all exposed, and the more you’re at risk for having your credit limit increased.
The length of your credit history.If you have had credit for a long time, like many people, then your credit report will show this as well. However, if you only have credit for a little while, it can look like you were just signing up for some of your creditors. It may also look like your accounts are fairly new. The one thing that will be affected by your age of accounts is your credit reports score.
Applying for too much credit.If you try to apply for too much credit in a timely manner your credit score will be lowered. If you have applied for three credit cards in two weeks, it can lower your credit score. If you need to apply for credit, but it is in a timely manner, wait until the application is going to be processed. Chances are the other credit will be accepted. For example, if you are trying to get an auto loan, and you knock out three credit cards in a timely manner, with the last one being almost ready, make sure the last one is not already in debt. This will help your credit score.
Leaving accounts open without using them.Leaving credit accounts open means you may have access to the credit that you don’t use, and this could lower your score. While, it could be tempting to plug open accounts, make sure if that is the direction you choose to go that you can keep track of the loans you make in that account.Conclusion: Credit is important, build your credit before attempting to apply for a major credit card.