DO NOT Get a Credit Card Until You Read This!!!

As many of you know that having a credit card is one way to build up your credit. Of course if it is used incorrectly it can actually hurt your credit score rather than increase it.

How do I use my credit card correctly in order to build up my credit score?

So the answer to that is… NEVER max out your credit card. It’s a vague explanation, but I will share some of my knowledge with you along the way and hopefully at the end of this you will apply it to everyday of your life! On your bank account you will see that you have an available credit of (X) amount that the money that you could spend on your credit card. You will also see a Credit Limit of (X) amount this is the money that the bank allows you to spend each month. You want to stay around 30-35% Credit utilization. Let me break it down for you.

Let’s say you have…

Beginning of the month:

Credit Limit = $1000 (How much the banks allow me to have owing at the end of month)

Available Credit = $1000 (How much I have left to spend)

Owing balance = $0 (How much I need to pay off)

End of the month of your Statement Period:

Credit Limit = $1000

Available Credit = $700

Owing balance = $1000-$700 = $300

My Credit Utilization at the end of the month is at 30%. I am increasing my credit! I cannot stress this enough but make sure to pay at least your minimum owing balance before the next statement period.

You do not have to wait until the end of the month to pay off your Owing Balance. If you have the extra funds to pay it off right away in full do so, and in turn will help build up your credit.

When you are in a situation where you really need to use up all of your Credit Limit balance. Make sure to at least pay the minimum owing balance before your next statement period and make sure to continuously pay that down along the way!