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Are you recovering from a struggle with debt or bankruptcy? Perhaps you are just becoming financially independent and want to prove you are a responsible consumer. Either way, learning to use a credit card effectively to build credit is an important skill to acquire. Learning to build your credit can allow you to qualify for loans, rental applications and can even affect your job prospects. To get you started on the path to establishing credit, here are some tips for using a credit card to build you credit.
How to Use Credit Cards Safely and Effectively
Find the Right Card for You: Once you can provide proof of income, you may be ready to apply for a credit card of your own. Before you sign up for one, though, you must do your research to find out which card is best for your needs and will benefit credit score. Ideally, you should search for a card with low interest rates, no annual fees, reasonable credit limits and clear policies for billing. If you expect to carry a balance from month to month, a low-interest card may be best for you, even if you need to pay an annual fee for it. At least initially, you may want to avoid reward credit cards, since they typically come with a higher annual percentage rate (APR) than other cards.
If you want to build your credit slowly and have a low credit score, consider a secured credit card, which is backed up by some type of collateral. Also, consider a retail or gas card, which provide fewer benefits with lower spending limits. These can improve your credit score and make you feel comfortable applying for an unsecured credit card.
Limit Your Credit Card Purchases: Do not be afraid to use your card, but use it wisely. Use the card occasionally for small purchases, and consider using it to pay for small recurring charges, such as website subscriptions (Netflix, Hulu or other services) that you can easily pay off each month. Low debt levels can also allow you to use your card for some emergencies, such as car repairs, without going over your credit limit. Additionally, you should be able pay off your balance at the end of each month.
Do Not Apply for Multiple Cards at Once: Applying for too much credit can hurt your score, especially if you have a low credit score when you apply. If you are looking to build credit, you should limit yourself to just one credit card.
Get Free Attorney Advice from a Bankruptcy Lawyer
Avoiding the perils of debt can be difficult, but our Maryland bankruptcy lawyer knows how to help you get out of debt and build your credit. Attorney Kevin D. Judd has assisted numerous individuals with high amounts of debt, and can guide you through any Chapter 7 or Chapter 13 bankruptcy process if necessary. Call our law firm today at (202) 888-8454 for a free consultation about debt relief.