Description: The article focuses on the center of capitalone activate. You will be given some tips on how to increase your credit score in one month. You are going to know the reasons why you need the credit card and the factors of the scores that you can get and something that needs to be paid attention to when you use the card.
I’m Monken, this is the month way, I got my first ever credit card before getting one, I did research on how to raise your credit score after one month, my score went from 0 to 667, it was easy, I’ll show you how to do this and go over the reasons why you need the credit card now.
You can subscribe. I hit the bell view learn something about Finance, I make these videos everyday and leave it to be nice, so why do you need a credit card? I finally got a credit card, because I need good credit to get a nice mortgage rates, most mortgage approval places won’t approve you unless you have some credits.
It is the same of a car loan, if you ever want a car that requires borrowing money, even starting a small business might require alone, so it’s a good idea to build your credit today even if you might not need a loan for a while, because a part of your credit score depends on how long you’ve had your card.
Even if you don’t think you’ll buy a place anytime, one day you will trust me, you want the best rates, even a 1% difference in mortgage rates saves you tens of thousands over time and lastly credit cards have cashback, you can get 2 to 4 percent of your spend back as money which is free.
If you do it correctly, your first card will have a low credit limits, since you have no previous history of credits or maybe even a secured credit card where you have to pay before using it, it doesn’t matter which one it is, because you’ll only be using this card to build your credits, make sure you don’t ever carry your balance meaning always pay off your card before using it.
Otherwise, you destroy your credit fast, so how did I raise my score to 667 the first month after I got my card, it was very easy, it only required using the card one time to order food at 30 dollars and I paid it off as soon as I got the bill, that’s the most optimal way to increase your credit fast.
There’s no special secret to a high credit score now, tell you if your American or Canadian your credit score is a number that ranges from zero to a hundred and fifty nine hundred for Canadians zero being very poor or no credits seven hundred being good enough for most loans and over 800 being the best.
You want to keep your score in the 700 range, if you want the best rates, your score is made up of five factors, the first is payment history, making up 35% of your score, this means how many on-time payments you have made now in credit card, the more on-time payments, the more they trust you to borrow money.
You’ll receive a bill at the end of the month, telling you how much you’ve used on your card, you have at least 21 days after receiving your bill to pay it without any interest to keep this part of the score maxed, pay off your bill every month.
When you get it, that’s exactly what I did, when I received my first bill, pay off the balance missing a bill or not paying, it will definitely reduce your credits, the second factor is utilization, you borrowed on your card making up 30% of your score, this one confuses people.
But it’s very simple, it’s the amount you use compared to your credit limits, the less of your limits you use, the better your score will be, it is similar like the less risk the last money you use, the fewer chances you will be paying them.
For example, if your credit limit is $1,000, meaning you can spend up to $1,000 a month and you spend $100 a month, that’s 10% usage people tend to use around 30% average, but if you keep it low at 1%, your score will blow up, you can even use your percent of your credits for a maximum score, this requires you to pay off your balance as soon as you spend it, meaning if you bought $10 of food, go online and pay off the same day.
If there’s no balance at the end of the month, when your bank reports your credits, they’ll be recorded at the lowest possible usage 0%, you still want to use the card once a month or your score won’t increase due to the on usage opening in more credit cards.
It’s a good thing, because you’re getting a bigger credit limits, if you get a second card without $1,000 limits, your $100 spending became five percents, because your total limits will be $2,000, instead, this increases your credit score, this score only counts recent months.
So don’t worry if you overspend on some months as long as you see below, before you need a credit check, that’s already 65% of your credits pay on time, don’t use the card more than once a month on a small purchase, it’s as simple as that.
Let’s look at the last factor, the third factor is length of credit history making up 15% of your score, this means the longer you have your card, the better the score will be, so a person with 10 years of credit card usage will have a better score, this is why you don’t want to close your oldest card, because this counts the average length of your credit cards combined.
So opening a new card will reduce the score, until you’ve had it for a longer time, if you had a car for 10 years, open a new one, I used it for one year, the average credit history would be 10 plus 1/2 5.5 years which is lower than having one card at 10 years, keep your oldest card and this score will go up in time, you can always call your bank to raise your credit limits on that card.
The fourth factor is credit mix, making up 10% of your score, this is how many different types of loans you’re taking else, meaning that if you have a mortgage, a car loan and a business loan, this score will be hired as someone with only a credit card, I can see that you’re capable of handling all these loans.
But since there’s only 10%, having a credit card is enough for a beginner and finally we have new credits at ten percent of your score, this score gets reduced, if you open two main new credit cards at once,because it’s a bad sign that you might be in financial troubles.
Hard credit inquiries also reduce the score such as the one they have to make when a time for new loans getting a new card every year.
In fact since it goes back up overtime, don’t apply too many new cards or new loans, keep using that one card as a beginner and apply for a mortgage when the time comes for the best score using all five factors to my advantage.
The best plan seems to be this for the first factor, pay off the bill in full as soon as you get it the second factor, used a card only once a month not exceeding one percent of your credit limits for my three thousand five dollar limits.
This means thirty five dollars max for a good score, the third factor is a passive one, keeping this first card and never closing it will increase the history length.
The fourth factor having more credits in the mortgage will increase this one and the fifth doesn’t have heart checks when you get new credit cards until you’re ready using my card once and paying it off on time, it took much to raise my score, just 667.
So why did I only get a card now? I never used credit cards, because I was taught boring money is unsafe, I never learned about good debts which is boring money on a low interest and making money using that money.
For example, if I borrow on a 3% interest and invested in the S&P 500, you’ll get 10% a year giving you some percent profit on that loan, a credit card could be out safe spending responsibly makes you money over time credit card debit huge and very common in America a 15% average interest rate is hard to get out.
So you have to make sure you control your spend. I’ve never needed to borrow money before this, so using this card once a month on food, it is very easy, but if you don’t have much money and suddenly you had an extra $1,000 a month, it’s very tempting to use all of that.
But trust me when I say this credit card debt will destroy any hopes, you have of getting rich in the future, it’s hard to get out of debt, if you’re not careful, only use this card to get better credits apply for a better card with good rewards in the year, you could be getting four percent cash back on your spending which is a lot of money along with having a good credit score.
Those two benefits could save you over a hundred thousand dollars over your lifetime, even more, I’d be used alone for investments, so apply for a car today, go to your bank sites and write down your information, that’s why I did and I’ll receive my car two weeks later.
Hopefully, you now see the benefits of a credit card and use these tips to increase your score fast, subscribe and hit the bell, if you learn something and make finance, I’m investing videos like this every day and leave a like to be nice, keep watching your billion credits. See you next time and have a nice day.