At NC Credit Solution we are asked often how to use a credit card to build credit. Let’s start with first going back to the basics and defining what credit is. Credit is defined your ability to make payments over a period of time. Memorize this and remember that the key to building credit is understanding exactly what it is. You can’t build credit if you don’t understand it and you’re using a credit card like cash. Very often we notice that many people tend to use their credit card like cash which is the wrong thing to do if you are trying to build positive credit history fast. Instead of doing that, learn to understand it and build it and sustain it so if you experience set backs then you know EXACTLY what to do to get back to where you fell off.

Let’s begin on the next topic of “Building Credit by Properly using your credit card”. If you don’t have a credit card and want one then our company can help get you a secure credit card by clicking here 👉 creditbuildercard.com/ The strategies I’m about to teach you to build positive credit history fast is effective with either a secured credit card or a unsecured credit card. Let’s assume you have a $200 secured credit card. The first thing you want to do is put money on it however you need to monitor that amount you put on your credit card and make sure you do not use more than 30% credit utilization. 30% of your credit score is credit utilization. So, with a $200 secured credit card, you don’t want to use no more than $60. Why $60? ($200 x 30%) equates to $60. If you have a bill that is less than $60 then it is perfectly fine to use your credit card for that in this example contingent your credit limit is $200 or higher. Change your mindset and start using 30% of your credit card as the NEW max you want to use on the credit card, the next question is “When do you pay it?” Key Note: Always pay on the STATEMENT DATE! Not the due date. The statement date can be found on your statement summary and would say something like “Open – Closed Date” or for example “6/18/2020 – 7/17/2020” The statement date would be the date that is closed so in this example it would be 7/17/2020. Always call your bank to confirm your statement date if the statement summary does not reflect the statement date. Why should I pay on the statement date? Let’s assume you go over that $60 on your secure credit card and spend an extra $10 to get food totaling $70 by 7/16/2020. The statement date is tomorrow. If you pay $15 on your balance ($70-$15) then your creditor will report a balance of $55 to the credit bureaus. You are under 30% utilization and sustaining good credit.

Key Takeaways: Stay under 30% utilization and pay on the statement date to effectively and properly use your credit card.

Next, let’s dive into when to pay on that credit card and how long should you wait to pay it off. 35% of your credit score is payment history. Remember That! It’s not always a good idea to pay your credit cards off fast because you’re not showing the banks you can make payments over a period of time and only showing them, you have money in the bank to pay your credit card bill off in full every month. It’s not a bad thing to do that however if your goal is to build your credit up then that it is not the best approach. Instead, At NC Credit Solution we recommend keeping your credit balance below 30% at all times, paying on the statement balance and then waiting 4 to 6 months before you pay your credit balance off. Why 4 to 6 months? Remember 35% of your credit score is Payment HISTORY not payment in FULL every month. So, if you pay your credit card bill in full then you are not showing a pattern of good payments or a positive payment history. Think of it like this. Let’s imagine you’re a mortgage broker and someone want to borrow $100,000 from you to buy a home and they tell you “well I pay my $100 credit card off in full each month” The next question from the lender would be “Well how do I know your going to make payments over the life of the loan if you don’t have payment HISTORY and pay everything off in FULL every month? Most people cannot afford to pay a car off in full each month let alone a home. Payment history is good for your credit score. The only bad part about it is the interest you pay on your credit card. However, if you pay it off in full each month, you’re saving on interest but hurting your score if you are trying to build credit. The smart thing to do would be to first BUILD a positive credit history, gain a score over 700 or in the 800 and then negotiate the terms of your APR on your credit card to a very low interest rate. That way you save on paying less in interest and when you apply for new loans, credit cards etc. in the future you save hundreds of thousands of dollars by getting great rates and possibly paying 0% in interest.