How to Build Good Credit With a Credit Card

Credit cards can be used to improve a credit score.

Credit can affect everything from apartment rental applications, the ability to obtain loans and even auto insurance rates. Having a bad credit score can be like having a disease that is hard to rid yourself of. With the right knowledge and discipline a credit score can be built up using a credit card. While there are many pitfalls in the credit world, most people fall into these traps out of ignorance or lack of planning.

Instructions

Opening a Card

1. Find someone you know who already has good credit. You may be able to convince them to add you as a joint user on their credit card. Being an authorized user on a credit card no longer improves your credit score as it did in the past, according to MSN's Liz Pulliam Weston. If you are going to become a joint user on a card, make sure the other person pays the card on time because any negative activity on the card will hurt your credit as well.

2. Find special credit card offers, such as those advertised on most college campuses and at sporting events. The requirements to get these credit cards can be some of the lowest so they can be a good way to begin a positive credit history. It is important to note anyone can get in trouble with credit cards. Spending should be kept at a minimum or damage to a person's credit report can result.

3. Look for banks that offer secured credit cards that require you to deposit the card's limit in an account with the bank. Secured cards are an excellent way for someone with a tarnished credit history to begin building positive credit. The best place to start looking for a secured card is where you already do your banking. As with any credit card, be aware of the application and annual fees because those can become burdensome.

Using the Card

1. Use your credit card regularly, preferably once a month. Regular use will ensure your credit report stays current and builds a consistent positive credit use history. Regular use of the credit card will also prevent the card from being canceled by the issuer, which can have a negative impact on your credit score.

2. Keep spending not only regular but low on a credit card. Charging an amount that is only a small percentage of the card's limit and paying it off immediately will ensure your score is not damaged by negative activity. Buying a tank of gas or some groceries, things that you purchase regularly, are ways to make sure you do not get caught in the trap of carrying a balance from month to month on the card.

3. Pay off your card entirely before the minimum payment is due. If you are not able to pay off the card each month, make sure to pay more than the minimum balance on the card. Not only will this pay the card off sooner, which means less interest will accrue, but also it reflects more positively on your credit report than simply paying the minimum payment each month.

References

• MSN: 9 ways to build credit from scratch
• Creditcards.com: 10 ways students can build good credit