Finance - creditscores

Building credit and improving your credit score are preoccupations for many of us. Whether you’re building credit from scratch or trying to improve your past history, credit cards are extremely useful to improve your financial position. Companies will rush to offer you their services, their credit cards and other lines of credit, but they don’t often provide the guidance you need to use it sensibly, so that’s what we’re trying to do.

1. Set the Ground Rules the Day you are Approved

Once you have that first approval for a credit card, put some ground rules in place and stick to them like glue. Taking it slowly is the best approach and you should never max out a credit card unless there is an absolute emergency and even then, you should look for other alternatives first. Maxing the card out means you’ll pay high interest and could quickly accrue fees if you do not make the payments on time.

The best way to get started with a credit card is to make small charges and pay them off every month. This helps to build your credit history and show you are a responsible borrower. You could use it for a regular monthly payment such as your Netflix subscription or home insurance and transfer the payment on the day you get paid to ensure no interest and build up that good record.

2. Exercise Self-Discipline

The temptation to chuck loads of treats and even daily expenses like the food shop on a credit card can be huge, but it’s always best avoided. Sensible credit card users become experts in self-discipline, and you need to make sure you can always tell yourself no if a charge is likely to leave you in financial difficulty at the end of the month. You must also make sure you budget to pay off your credit card each month, so don’t use the Netflix money on something else, make sure it’s there to pay off your card.

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