Credit Cards good for building credit?

[jmoney1]

What is a good credit card for building credit? And do you all recommend making a purchase on the card that can have the full principle balance paid off within a month, or a payment large enough that multiple payments would need to be paid throughout the year showing responsible payment history? Which is better for credit rating? Thanks! I am new at this but am determined to learn.

[hamchan]

If you don't already have a credit history, or if your credit score is pretty bad, you can almost always get a secured credit card. After a certain amount of time, if you pay your bill on time, most of the time it will convert to an unsecured card and you will get your deposit returned to you.

If you do have a credit score, and it's on the lowish side, I have had good luck getting a Capitol One Card, a Target card, and a Penney's card. You will want to use it each month for something inexpensive, and then pay the entire balance when you get your bill. My husband had no credit history until last year. Once he got a card he just had one of his smaller automatic payments go into his, and then paid it off each month. After a short time his score increased to where he was able to qualify for more cards with higher limits.

The most important things to do to raise your score are to keep your overall utilization low, and make your payments on time. So, say your first card has a $300 limit. Don't charge more than $30 in any given month. You don't want to charge more than 10% of your total limit in any given month. Make sense?

[Wino]

What is a good credit card for building credit? And do you all recommend making a purchase on the card that can have the full principle balance paid off within a month, or a payment large enough that multiple payments would need to be paid throughout the year showing responsible payment history? Which is better for credit rating? Thanks! I am new at this but am determined to learn.

First off, a warning: You are approaching a slippery slope. The vast majority of people contemplating "building credit" end up in debt up to their ears. Many of them, if not most of them, end up staying under the debt load for decades.

OK, now that I've given you the warning: As long as you use the card every month, you'll owe payments. You should pay off the full amount every month. This will show an on-time payment history along with a monthly balance, but you will not pay any interest. The first time (yes, the very, very first time) you pay interest, you've over-extended yourself and you should stop trying to "build credit." You should cut up the card and not get another one until you get your spending back under control and you are ready to try again to build credit.

Your credit should be able to go into the low 700's using only credit cards. You will require other categories to go higher, but anything over about 740 is "extra" that does nothing for you except bragging rights. You should be able to get to 740 having just two credit cards and a mortgage. A new car loan will help your credit, but it will NOT help your net worth or your financial situation. Buy a car from Car Max or similar, for cash, for the best use of your money.

I went beyond your question, but the above paragraphs are a good place for you to begin.

[Jerry91]

In my opinion, secured credit cards can be a good option to build up credit. In case you take out normal credit cards, you will have to maintain them well. You will have to pay off the debts in full every month. Partial payments or late payments may have a negative impact on your credit situation.

[jmoney1]

Can't thank you all enough. I have a chase card and will begin putting this into practice, and setting up an automatic payment in full. I haven't looked in to secured cards much so I will check that out as well.

[jmoney1]

You don't want to charge more than 10% of your total limit in any given month. Make sense?

I actually have a Sams credit card with a $3000 limit, so I supposed charging around $300 per month and paying it all off via automatic payment by the end of the month is the way to go!

[disneysteve]

I actually have a Sams credit card with a $3000 limit, so I supposed charging around $300 per month and paying it all off via automatic payment by the end of the month is the way to go!

That would be fine. As others have warned, though, make sure you aren't using the card to make any purchases that you wouldn't already be making. Use it to buy gas, for example. Or set up auto payments for a couple of recurring bills like auto insurance or gym membership or something that you already pay monthly. Just switch to using the card to make those payments.

[bjl584]

What is a good credit card for building credit? And do you all recommend making a purchase on the card that can have the full principle balance paid off within a month, or a payment large enough that multiple payments would need to be paid throughout the year showing responsible payment history? Which is better for credit rating? Thanks! I am new at this but am determined to learn.

Others have already given good advice. I just want to add to make sure to use an actual credit card. Debit cards don't count toward your credit score.

[jmoney1]

That would be fine. As others have warned, though, make sure you aren't using the card to make any purchases that you wouldn't already be making. Use it to buy gas, for example. Or set up auto payments for a couple of recurring bills like auto insurance or gym membership or something that you already pay monthly. Just switch to using the card to make those payments.

Thanks that's very helpful. Instead of making purchases that i don't need, I might want to have a card JUST for gas.

Others have already given good advice. I just want to add to make sure to use an actual credit card. Debit cards don't count toward your credit score.

Thanks, i have been using that useless debit card far too long to purchase things, its time to switch things up.

[Petunia 100]

Thanks that's very helpful. Instead of making purchases that i don't need, I might want to have a card JUST for gas.

You might want to try getting a rewards card. For example, American Express Blue Cash Everyday pays 2% cash back on gas purchases. Capital One Quicksilver pays 1.5% cash back on everything.

[jmoney1]

You might want to try getting a rewards card. For example, American Express Blue Cash Everyday pays 2% cash back on gas purchases. Capital One Quicksilver pays 1.5% cash back on everything.

Thank YOu!

[gsellati]

I would highly recommend getting a credit card for building credit. If I hadn't done this, I may not have been able to get a loan for my house.

I wouldn't go above 30% credit utilization, and I would just pay it down all the way every month. This will do wonders for your credit score. I was able to get a 2.75% interest rate on a house this past February by using credit cards to build credit.

Unless you've had loans, credit cards are almost mandatory for building credit. The only thing I regret is not having gotten a credit card sooner than I did.

[jmoney1]

I would highly recommend getting a credit card for building credit. If I hadn't done this, I may not have been able to get a loan for my house.

I wouldn't go above 30% credit utilization, and I would just pay it down all the way every month. This will do wonders for your credit score. I was able to get a 2.75% interest rate on a house this past February by using credit cards to build credit.

Unless you've had loans, credit cards are almost mandatory for building credit. The only thing I regret is not having gotten a credit card sooner than I did.

HA any chance I can do this to improve my score within a year?