Building Credit

Ahh. Credit has never felt better! (Photo: Unsplash)

Whether you are looking to get your first credit card or are looking for a new addition to expand your portfolio, a credit card is one of the most important tools that you can have in your fiscal arsenal. At Save The Bucks we consider a credit card to be a Best Interest Basic (BIB).  By having a credit card, you will be able to build your creditworthiness history over time and graduate to other financial products that will allow you to obtain additional financial tools as needed.

Starter Credit Cards

These cards are perfect for those who are looking to get their first credit card and want to build up their credit portfolio. By using your credit card responsibly, you will be able to build up your credit score, with the most frequently used score being the FICO®. Scores can range from 300-850. A higher FICO® score will help to establish you as a responsible borrower of credit. To ensure that your credit card history stays squeaky clean, be sure to pay off your balances in full every month. If you do need to keep a balance, aim for a total credit card usage of less than 15% (under 10% is ideal). This will keep your credit utilization ratio to a minimum, which will improve your overall score.

Will I be approved? Cards in this category often require a good credit score for approval by issuers. If you are starting fresh after a bankruptcy, possess limited credit history,  or have a current low score, there are also secure credit card options that will allow you to place a small security deposit that is often matched to your approved credit limit.
For example: You might apply and get approved for a $1000 limit secured-credit card, however, you would need to place a $1000 security deposit down to assuage the “risk” of the creditor providing you with a card when you possess limited, or poor credit history. Oftentimes, once a healthy history of routine payments, and responsible use has been established, your security deposit will be refunded to you (time length varies from creditor and can be as little as six-months to three years).

Rewards Credit Cards

Rewards cards are great for those who use their credit cards frequently and are looking to get the best “bang for their buck” returns. These cards allow you to accumulate points that can be applied towards your overall balance or used towards purchases from numerous online retailers. Many rewards cards also offer specific rewards for purchases such as gas and groceries (colloquially known as “everyday rewards cards”). Whatever preferences you have, you can be sure that there is a credit card for your preferred rewards category. Most credit card issuers in this category seek a good to excellent credit score range for approval.

Travel Credit Cards

If you are someone who travels often for work or leisure, then a travel credit card may be best for you. travel credit cards allow you to accumulate points based on travel related purchases such as airline tickets, hotel stays, concerts, car rental, and similar related purchases. As an additional perk, higher-tier travel rewards cards often include concierge services that allow for earlier check-in to hotels and exclusive discounts on ticket purchases for events. Some cards even offer double points for certain spending categories, or payment cycles. There are also airline specific travel cards that will offer further incentives for booking with them and using their card for your trip. Individuals with good-to excellent credit can usually find something that will work for your needs within this category.

Check out our latest articles on building credit.

In the Interest of Things: Navigating Credit Card Interest Rates

Carrying an unpaid balance on your credit card can easily become your downfall. This unpaid balance accumulates in your account and if unpaid, the consequences …