How to Improve Your Credit Rating by Using Credit Cards

March 20, 2012 by  Filed under: Credit 

Your credit rating plays an important role in your life though many do not realize it. Your rating is the biggest determining factor when trying to secure a large loan for a house or a car. A poor rating can disqualify you from getting the loan you need to help you make the large purchase of a home or car, which is a big part of the American dream. If you have a poor credit rating, all is not lost. You can work to improve it so that you can easily qualify for the loans that you need to help you achieve your dream.

One way that many are improving and rebuilding their credit is through the use of credit cards. They give you small lines of credit that allow you to make purchases and payments anywhere they are accepted. What makes them effective as a way to build your rating is that they function similarly to small loans. Credit card companies require that you make monthly payments to repay the loan that was given to you when you used your credit card. When you make your payments on time, your rating increases over time.

It takes a little more than applying for and owning a credit card to raise your credit score. Lenders are not too concerned about you having the opportunity to use your card in as much as they are concerned about you repaying the amount you used. This is what helps establish your credit history. Once you have applied for and received a card, the next step you should make is to make reasonable purchases with it and promptly repay the amount loaned.

Using your credit card and promptly making the necessary payments is sure to build up your credit score. One suggestion on how to use one to build your credit is to use your credit card for typical purchases that you normally make, such as for gas or groceries. Limit your spending to only that which you would normally spend on these things. Once you get the monthly bill, pay the balance off using the money that you would normally spend. Over time this will help build your credit rating.

Another way you can use your credit card to build your credit rating is to make a purchase of one large item that you would normally have to save for. Examples of this can be a new television or new furniture. Do not make any other purchases on it, but do pay the monthly installments promptly when you receive the monthly statements. Continue making the payments on time until the item is completely paid off. The results of your efforts will be an improved credit rating that will make it easier for you to secure larger loans that require a good credit rating.

Visit http://www.creditcardrates.com to find the best credit cards for you and some of the lowest credit card rates around.

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