How To Build Credit With Credit Cards

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In past American civilization, credit was not a big issue. There are actually records of major business contracts and loans without a signature, a simple firm handshake was enough to close any loan. Through the last fourty years, credit has become more and more important to the average American. These days, a firm handshake just doesn't quite cut it. Even though credit is so extremely important, the fine art of building your score is not mastered by too many Americans. I would like to go over just one piece of the credit building puzzle and that is using credit cards as a fast track to good credit scores.

The credit card also a fairly new piece of the average American lifestyle, is a piece of plastic that can be used to take a last minute loan for any item from groceries to auto insurance. The versitility of the newly found card is endless. However, for new borrowers it can seem to be a bit difficult to get your hands on one of these mysterious pieces of plastic. There is however one type of card that is designed not only to use as a last minute loan but also to build great credit scores. This card is most widely refered to as the secured credit card and is offered by almost any major issuer from Bank of America to Discover card.

Secured cards are a great tool for many things. Using secured cards can prove to be very benificial in building great credit scores. Although there are great upsides to using secured cards, there are some things about them that may prove to be a little concerning when you first open the account. When opening a regular credit card account, there is no up front cost, this differs from secured cards. Secured cards are called secured cards because of the security deposit required to open the account. When opening one of these cards you are required to place a security deposit usually somewhere between $250.00 and $500.00. This security deposit then becomes your credit line. So with that said, you are essentially paying interest charges to borrow your own money. I know this can be disturbing however, it will work out for the best as long as you utilize the account properly. Usually after about 12 to 18 months, the security deposit you used to open the account will be refunded to you and at that point, the secured card becomes an unsecured credit card and you are now borrowing the bank's money.

With that said, I want to make sure you understand the proper way to use secured cards or any other card for that matter. There are a couple general rules of thumb to go by when utilizing credit cards and here they are:

Rule #1 - Always pay your bills on time or early - Although the due date is the 21st, this doesn't mean you can wait until the 21st to put the check in the mail, if you do, that payment will arrive late! As a matter of fact, I always advise that you send payments no later than 2 weeks early. This will allow time for mailing errors and for the card company to process the payment.

Rule #2 - Never over use a credit card - This concept is simple, always stay below 50% of your total credit line. If your credit line is $500.00 never carry a balance of more than $250.00 on that account. This will show creditors great money management abilities on your end and help to build and maintain a great credit score.

For more information on this topic or any other financial topic feel free to contact us:

By phone - (561) 856-4721

By email - Support@JemCreditCards.com