CREDIT CARDS 101: How To Use Credit Cards To Build Credit | Credit Cards For Beginners

Learn how to use credit cards to build credit, get rewards and cash back, and stay debt free along the way! Click "Show More" to see Ad Disclosure.

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RULE 1: USE CREDIT CARDS LIKE A DEBIT CARD
- Spend less money than you make
- Hold yourself to a monthly budget
- Buy what you can pay off in cash
- This will keep you debt free so you can build smart money habits that help you build wealth

RULE 2: START YOUR CREDIT JOURNEY THE RIGHT WAY
Become an authorized user (optional). Choose someone with strong credit. This is helpful if you’re having trouble getting approved for a card of your own (i.e. you keep getting denied for a credit card).

Next, get your first credit card; best is likely a secured credit card. Secured credit cards allow you to put a deposit down that becomes your credit limit. These are easy credit cards to get approved for.

Then, get your second credit card. This can be an unsecured “regular” credit card with no annual fee. Apply about 1 year after your secured card (that is, after building your credit score to about a 680 FICO score or higher).

How often should I apply for a credit card?
FIRST, build credit with 1-2 cards for a full year. Get FICO score to 680+.
THEN, 1 new card every 3+ months tends to work well as a general rule.

Which bank to start with?
CHASE. They have a 5/24 Rule.
You will receive an automatic denial for Chase credit cards if you’ve opened 5+ credit cards with any bank in the last 24 months, so get those first.

RULE 3: UNDERSTAND YOUR CREDIT SCORE (Credit Score Explained / How to increase credit score / How credit scores work)

The credit score range is typically from 300 to 850.
Bad credit = 300-549
Poor credit = 550-649
Fair credit = 650-699
Good credit = 700-749
Excellent credit = 750-850

To remember the 5 factors of your credit score…
Remember this: PHURLEMINA

PH = Payment History
UR = Utilization Ratio
LE = Length of Credit History (aka Average Age of Accounts)
MI = Mix of Accounts
NA = New Accounts

~~Payment History~~
Always pay on time.
Best practice is to pay before your credit card statement / bill due date.
Always pay in full to avoid interest.

~~Utilization Ratio / Credit Utilization~~
Represents how much credit you’re using compared to your credit limit, both for individual credit cards and across ALL credit cards. To calculate, divide your credit balance by your credit limit and multiply by 100. Best to keep your utilization under 30% to boost your credit score.

~~Length of Credit History~~
Represents the average age of all your credit card accounts. The age of your oldest credit card is also important. Pro tip: Get a credit card with no annual fee and keep it open long term.

~~Mix of Accounts~~
The types of accounts on your credit report, including: credit cards, auto loans, mortgage, student loans, etc. Having multiple types of accounts can help your score, but only get what you need.

~~New Accounts~~
Best practice = don’t open new credit card accounts frequently in short periods of time. The fewer new accounts you have (i.e. less than 1 year), the better. Keep all credit cards for at least 1 year.

RULE 4: LEARN THE CREDIT TERMINOLOGY
Terms include: Credit limit, credit line, line of credit, billing cycle, billing period, balance, minimum due, due date, annual percentage rate (APR), balance transfer, cash advance, annual fee, hard inquiry, hard pull, soft inquiry, soft pull, credit reporting agency, credit bureau, TransUnion, Experian, Equifax, product change, credit card upgrade, and credit card downgrade.

RULE 5: EARN THE RIGHT REWARDS FOR YOU!
Choose the right Reward Type, Reward Categories, and Reward Redemptions that come with a card you’re going to apply for.

BEST CREDIT CARDS FOR BEGINNERS WITH NO ANNUAL FEE
- Discover it Secured Card (start here!)
- Discover it Cash Back Credit Card
- Capital One Quicksilver Card
- Capital One SavorOne Card
- Chase Freedom Unlimited Card
- Chase Freedom Flex Card
- Amazon Prime Rewards Visa Signature Card
- Amex Blue Cash Everyday Card
- Wells Fargo Propel Card
- Apple credit card (Apple Card)
- Citi Double Cash Card

Disclosure: This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. Mark Reese is not a financial advisor.

#creditcards101 #creditscore #creditcards

Видео CREDIT CARDS 101: How To Use Credit Cards To Build Credit | Credit Cards For Beginners канала Mark Reese // Credit & Finance