Build Good Credit History Using Credit Card
Posted June 9th, 2010 and last modified June 18th, 2011Learn how to build good credit history using a credit card
Credit rating is a very important factor in all financial applications. Having a good credit history improves your chances of obtaining a loan, applying for a credit card or renting a nice place to live. The key to building a solid credit rating is by making timely payments on your existing lines of credit. If you have a Visa for example, you should ensure you always make the minimum payments on time, and never have too much outstanding debt.
ANZ First Visa credit card
The ANZ First Visa is designed for students, and people who are looking to apply for their first credit card. With the option of a low credit limit, this is a good credit card to begin with, so long as you keep your balance paid off each month
- $30 annual fee
- 0% p.a. for 3 months (reverts to 19.24% p.a.) on purchases
- 0% p.a. for 3 months on balance transfers
- Cash Advance Rate of 20.99% p.a.
- 44 days interest free
- Minimum Income Requirement of $15,000 p.a.
How to Generate Good Credit
Of course, if you don’t have any credit cards, building up good credit history is impossible. This is why you should apply for a credit card when you are at a financially responsible place in your life. Even if you feel you won’t use it, it is a worthwhile financial move, because even making small purchases on a credit card and paying them back immediately will build you a good credit history.
Where to Apply for Credit
Your bank is an excellent place to start, because it wants your business. Banks often give their account holders credit cards because it ensures their loyalty and continued business. Plus the bank earns interest on your outstanding balance. Another option is to apply for a store credit card.
Many department stores and large retail chains have them. Acceptance rates for store credit cards are relatively high, but beware of higher interest rates. You should also be wary of all the rewards and bonuses that these cards seem to offer. Do not get sidetracked from your main goal: to build a good credit rating for yourself. Only spend what you can afford to pay back in a short timeline.
Secured Credit Cards
Obtaining a secured credit card is another easy way to build your credit rating and is very accessible. A secured credit card is secured by the cardholder’s deposit account. The cardholder has to deposit at least 100% of the amount of credit they have into the account. The account is therefore a sort of collateral for any outstanding payment.
These credit cards are great for people without any credit history because they offer a very high acceptance rate. Make sure that you contact your provider to make sure they are reporting your payments, because some secured creditors do not. If you work hard to make your payments but they never get reported, you’ll get no credit for your financial accountability.
No matter which option you choose, it is important that you start obtaining and managing a line of credit in some form. This helps you build your credit rating, earning you a financial reputation that will carry you far in all of your investments.
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