Building credit is a piece of ambiguous advice often given to young people who need their first card. It also comes up when it’s time to get a loan for a new car, get a lease on an apartment, or other major life milestones.
Confused about how to build credit? You’re not alone.
Sometimes, it can seem like building your GPA in school. Turning in an A+ assignment barely changes your GPA. But one C tanks your GPA for the rest of the school year.
If you’re wondering how to use credit cards to build, we’ve assembled a guide for you below.
Approval Ratings
In our current financial world, credit provides mobility. It’s more than the ability to put accidents, disasters, and emergencies on your card and be able to use it as a potential safety net.
But your score is also an indicator of what you’ll be allowed to do. If you decide to get a new car, your score will indicate what kind of loan you get, or if you’ll be able to get one at all.
It will also dictate the terms of the loans that you will be able to get. The interest rates, the years that you have to pay off these loans, and other specific terms will all be dictated by your score.
Getting An Apartment
When you apply for an apartment, it can be a long and stressful process. Many parts of the United States are experiencing a housing crisis. When you apply for an apartment, your time often is running short.
You need a place to stay before your time is up in your current lodgings. Accelerating the process is important for your peace of mind and convenience, so you don’t end up staying in a hotel.
When your application is processed, your potential landlord will check your score. Your score may dictate whether you get approved at all, or whether you’ll need to find a cosigner to be able to move in and get lodgings for yourself.
Getting a Job
Believe it or not, some employers may check your credit score before extending an offer. They may want to see if you filed bankruptcy, have delinquencies, or have other financial issues.
This is meant as a way to check how responsible you are, how good you are with money, and whether you can potentially be trusted. While this may potentially seem unfair, scores can often impact your future employment.
Instead of wildly Googling terms on building credit like ‘self credit builder’ or ‘credit builder loan’, the best way to build credit is to practice responsible credit usage and build your score over time.
Building Credit
The building takes time and responsibility. Using credit cards to build is a good idea, as long as you take it slowly and make sure that you stay within your means.
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