Most people have heard horror stories about how credit cards lead many people into serious debt, that can take years to get out of, or lead even lead you into bankruptcy. However, there are two sides to every story and the truth is when a credit card is used wisely it can actually help you to achieve your goal of becoming a 1 percenter.
Establishing Good Credit
If you plan on becoming a 1 percenter by investing in real estate you are going to need to have a good credit rating in order to get a mortgage or a loan to purchase that property. A credit card can help you to establish a good credit rating that you can use when you need it. Here are some tips on how to use a credit card to establish good credit.
Choose Only One credit card
People who have multiple credit cards have a more difficult time keeping track of what they charge and have more tendency to charge more than can reasonably pay off. If you only allow yourself one credit card, then it is easier to keep track of your expenses.
Don’t Carry Over Charges
You want to establish credit not incur extra debt so only charge the amount on your credit card that you can pay off each month. You don’t want to carry over charges from month to month because that will cost you money you don’t need to spend. Paying your monthly debt off at the end of each month shows that you are responsible handling your money which helps in building your credit score.
Don’t Depend Solely On That Credit Card
You can’t depend solely on your credit to establish good credit. You also need to pay all your bills on times including rent and utilities. In addition, you also will want to take out small loans and pay them off either on time on in advance to help show that you are financially responsibly when incurring other types of debts.
When Not To Use Your Credit Cards
Knowing when not to use your credit card is as important as knowing when and how to use the card. You want to show that you are financially responsible in order to establish good credit, so following these tips on when not to use that credit card will help you to be more effective in establishing that good credit rating.
Never Use More Than 50% Of Your Available Credit
Part of the key to establishing good credit is to never use all of your available credit. Using most of your available credit can actually have a negative effect on your credit score which is what you want to avoid at all costs.
Avoid Free Offers That Come With Credit Cards
Many credit card companies offer freebies if you sign up for their card. While it is tempting to apply for these cards, get the freebies and then cancel the cards, you need to avoid this. Those canceled cards go on your credit report and can adversely effect your credit. Look at the big picture. If you want to become a 1 percenter, then you need to keep your eye on your goal and not get diverted.
While that credit card alone won’t make you a 1 percenter, it can help you to reach your goal by helping you to establish the credit you need so you have the financing you need to move ahead with plans.