If you are a teenager with your first credit card it is important to get on the right track to establishing a great credit score. In the future it will be important to have a good credit history when you are ready to make large purchases such as a house or a car. Follow Money MindEd’s easy tips and tricks to start building your credit score.
On Time Payments: The key to a good credit score is paying your bills on time. If possible try to pay your credit card bill early each month. To ensure that you do not make late payments set reminders on your phone, computer, or calendar.
Few Accounts: You may think that having many credit cards will quickly help to build your credit score. In reality having too many open accounts can actually lower your score. It is therefore important to think carefully about each account that you open and watch the number of credit cards you apply for.
No Debt: It is best to pay your credit card bill in full each month. If you are only able to make the minimum payment then you will be charged interest on the remaining amount until it is paid off, making a large dent in your credit score. In order to ensure that you can pay in full each month keep your purchases to about 10% – 30% of the cards limit.
Live Within Your Means: The excitement of a credit card may tempt you to make large purchases thinking you will be able to pay it off at the end of the month. Making too many large purchases may lead to a surprising bill at the end of the month. In order to establish healthy financial habits practice not spending more than you can afford to.