How To Build Credit With Credit Cards

Millions of people have lower credit scores than they would like to have. Some were reckless with their credit rating in their younger years while others have seen their credit rating fall due to financial issues. Financial issues related to medical expenses, job loss, loss of a loved one and more can all take their toll on a person's finances as well as their credit rating. Your credit rating is reviewed not just by financial institutions when you apply for a loan, but it is also reviewed by potential employers and landlords. A lower credit rating can have far-reaching effects on your life. If your own credit rating is lower than what you would like it to be, you can use credit cards to build your rating up to a higher level.

Make Payments On Time

Your credit rating indicates your creditworthiness. A large factor involved in calculating your creditworthiness is your ability to make payments on time as agreed. When you open a credit account, you agree to make minimum monthly payments by the due date on a regular basis. To improve your credit rating, you will need to start making your payments on time. The payment amount should be at least the minimum monthly payment required on your billing statement. It is a good idea to send a payment so it arrives at the card company's office a few days ahead of time. When you are trying to improve your credit rating, avoid making your payments too close to the due date as mail can be delayed. If you don't use a bill pay service through your bank, you may consider calling your card companies directly each month to ensure the payment was received on time.

Pay Balances In Full

While paying the minimum schedule payment amount is all that you are required to do in order to maintain and improve your credit rating, there are benefits associated with paying your balances off in full each month. Your credit rating reflects your creditworthiness, but it also reflects the perceived risk that other creditors may have when they lend to you. Factors such as balances close to the available credit limit or maxed out accounts as well as numerous accounts with high balances all affect your risk level. Even when you pay minimum monthly payments on time as agreed, your credit rating may be lower because of high account balances. To improve your credit rating, it is best to make small charges to your accounts each month and to pay those balances off in full.

Fund a Savings Account

Debt balances can accumulate quickly, even when the best efforts are made to pay balances off in full each month. Many people turn to credit cards to pay for various expenses when cash is not available. This may be to pay for medical expenses, home repairs, car repairs, budget shortfalls due to over-spending and more. When you have money saved in a savings account, you do not need to rely on your available credit balance to cover you financially during such times. Instead of using credit and accumulating debt, you can turn to your savings account funds. This can help you to better control how you use your credit accounts so debt does not get out of hand.

Building or improving your credit rating with credit accounts will take time and effort. A rating will be improved over time as you establish a history of responsibly managing your credit accounts and other debts. In order to enjoy the best results, take care to make only planned purchases with your cards. Then take great care to ensure payments are made on time each month.

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