Can A Credit Card Improve Your Credit Score?

The title of this article sounds outlandish but using a credit card in the particular way mentioned in this article may actually help your credit score. Having a good credit score gives you the opportunity for loan and credit card applications to get approved and being charged lower interest rates on those loans. So it’s worth doing what you can to make sure you have a good one.

Credit agencies want to see that you repay your credit on time and that you are dependable with credit (35% of your credit score is based on payment history). One of the ways to show them this is to make use of some type of credit where they can see you using it and repaying it on when it’s due each month. Obtaining a credit card or store card and using it regularly is one way to accomplish this. By using it for a period of at least 6 months, you get the benefit of a good payment history showing up on your credit report.

A simple way to start the process is to get a store card or credit card with a small limit. Don’t make it too high; around $500 is a good place to start. If you’d prefer, you could apply for a secured credit card. What happens here is that you leave a deposit with the bank for the amount you wish to have as the credit limit on your card. If you want a $500 credit limit, then you deposit $500 as collateral against the credit card and this is kept by the bank. You then have the use of the credit card to be used exactly the same a regular type of credit card, including making the repayments by the due date.

You need to start using this credit card on a regular basis, on something that would be easy for you to repay by the due date. For example if you have the cash to pay for a small item, use your credit card to pay for it instead, then use the cash you were going to pay for the item as the repayment, so it is paid in full by the due date. This is what will establish that good payment history that will improve your credit score.

Please don’t be foolish and go on a spending binge with this credit card and get yourself into debt. That is not the reason for getting the card. You want to establish a good repayment history which will positively affect your credit score, so keep the items you charge within your budget so the credit card can be repaid in full each month. By using the card in this manner you will achieve your aim of an improved credit score.

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