3 Quick Tips For New Credit Card Users

Dated: August 28 2022

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In some cases, a lender will ask the buyer to obtain a secured credit card to help establish credit or boost it. Obtaining a credit card comes with a responsibility that shouldn’t be taken lightly. A credit card can help you establish credit, but if not used properly it can lead to long-term debt and damage your credit score. Here are a few tips to help manage your new card:

1. Avoid Late Payments

Making your payments on time is an important factor when lenders look to determine your creditworthiness. Your payment history makes up more than one-third of your FICO score. As a result, the way you pay your bills will have a significant impact on whether a credit card will impact your credit score in the long run.

To avoid late payments, set up auto-pay on your card for at least the minimum monthly payment. By setting up auto-pay, your credit card bill will be automatically paid with funds from a connected bank account.

2. Purchase wisely

A way to avoid paying penalty fees is by charging purchases you actually have the cash in the bank to pay for. You should only use your card for planned purchases and in conjunction with a monthly budget or spending plan. Doing so can help you enjoy the perks and convenience of credit without racking up long-term debt and paying more for everything you buy along the way.

3. Keep your credit use below 30 percent

Another factor to keep in mind as you build credit with your card is your credit utilization rate. Your credit utilization ratio is the amount of money you owe in relation to the amount of credit you were extended. To avoid your credit card negatively impacting your score, most experts suggest keeping your utilization below 30 percent of your approved line of credit. For example, if you have a credit card with a limit of $500, you shouldn’t use more than $150. 

In conclusion, simply having your first credit card will not get you good credit alone. How you use it will either help or harm your credit.To get the most out of your new card, use it carefully and make purchases you can absolutely afford to pay for in cash. Keep your credit utilization below 30 percent, and pay your bill on time, only then you will certainly see your credit score increase over time.

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Faith Barron

I'm just a mom on a mission to help under-served families secure housing in this crazy market! Being a licensed Real Estate Agent and member of the Orlando Regional REALTOR ® Association, I'm equi....

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