Open a Credit Card Account Immediately After Graduation
Building a loan is one of the hardest but most essential financial tasks when you enter the work world, and a credit card – when used correctly – can be a great tool to help you secure lower interest rates on a car or home loan.
Credit card will help you in the long run, says Jill Gonzalez, analyst at WalletHub . “Getting a credit card and using it responsibly helps people increase their credit. Having a good credit history leads to higher rates and lower interest payments on loans such as mortgages, car loans, individual loans, etc. “
When should you get a credit card?
The minimum age to apply for a credit card is 18 years old. However, according to Greg McBride, chief financial analyst at Bankrate.com , if you decide to apply when you are under 21, you will need either a stable income or a parent / co-author. After 21 years of age, you are automatically eligible to apply for a credit card.
“As soon as you turn 21 and have a stable income, you will be able to receive it. If you don’t have a steady income, start with a secured credit card, and after a year or two, you will probably be upgraded to an unsecured card, ”McBride says. The secured credit card is funded by you, which means that the deposit amount is your limit. An unsecured credit card is funded by the credit card company, which means the limit set depends on your credit rating and other factors. Begin to consider your options while in college or shortly after graduation. The sooner you receive your card, the better for your credit score.
Credit card options to prioritize
When you look at different credit cards, you will see many variables such as commissions, cash back, annual interest rate, and more. Gonzalez and McBride say boxing is the first thing you should look out for. “You should look for a credit card with no annual fee, and if you are traveling, no overseas transaction fees.”
McBride encourages you to develop good credit card habits first, such as limiting your spending and always paying on time. Once you get into the habit of paying out your card regularly, you can start looking at other options like credit card rewards, cash back, miles, or points.
How not to overspend
As convenient as credit cards are and how much they help you accumulate credit, you can easily get into trouble if you don’t keep track of your purchases. McBride’s tip number one is to manage your credit card like a debit card. “Don’t buy anything if you don’t have money in your account right now.”
It is also important to keep track of your spending in relation to how much you earn; never spend more than your income. You also have the option to pay for your card within a month so you know exactly how much money you have at any time. Setting a calendar reminder of when your bill is due each month can be a good way to help you pay your credit balance on time.
Tips for increasing your credit rating
The best way to maintain a high credit rating? Pay your bills on time. Also, try to use the smallest amount of credit available. McBride recommends that if you want to maximize your credit rating, you should never let your balance exceed 30 percent of your credit limit. To positively influence your result, keep it below 10 percent. “If you have a credit card line with a $ 10,000 limit, it’s best not to let your account balance exceed $ 1,000,” McBride says. If this seems too ambitious, keep the balance below 30 percent. However, spending above 30 percent can damage your credit score.
Don’t apply for too many cards at the same time
You may be tempted to apply for multiple cards at once to see which one approves of you and which one is the best. It is a bad idea. Each application will require a “thorough investigation” that will lower your score and lower your chances of getting a card. Therefore, if you were denied the first credit card you apply for, try to find out the reason before applying for another credit card.