Building credit can seem like a tedious process since it takes a while for a positive change to be reflected on your credit report but only one wrongdoing to instantly see the negative impact. Many people have these same sentiments, which is why this article was created to help ensure your credit score maintains a healthy upward trend and is as accurate as can be.
You have heard the phrase “less is more” well when it comes to credit cards that is an important concept to remember. Once you have been approved for your first credit card it can be tempting to try and open another one right away to expand your credit pool. Well, you should think twice before doing that because if your credit application is rejected then your credit score will be negatively impacted and cause you more issues. Instead, wait it out with that first approved line of credit and build a good repertoire with the financial institution that gave it to you. What will happen eventually is two things, the first being that after using that single credit line responsibly your bank will automatically increase your credit score and credit limit. The second thing that will happen is that thanks to the positive relationship you have built with your credit issuer they will start to send you pre-approved credit line offers. These offers help lessen the risk of being denied when opening a new credit line and only start appearing after you have maintained a stable line of credit for an ample amount of time as credit bureaus deem you as a positive risk to lend money to, according to your credit utilization ratio.
Spending Limit – Extra
With a higher credit score, you get access to more funds from your bank but that does not mean that you should be spending it all. The key to continually increasing your credit score is simply setting a limit for yourself that shows you are financially responsible. Think of it this way, credit scores are reported every 3-4 weeks, and in that time your credit card debt accumulates far past what you can pay off right away you are demonstrating a high level of high credit utilization which is seen negatively by credit bureaus and can lead to your credit score dropping or becoming stagnant. To avoid this make sure your credit card debt does not exceed your own monetary assets. A simple way to ensure you don’t overspend is by setting up a warning or flag on your card once you reach a specific amount of money, creating an alert through your bank’s app or by using a card like Extra.
Extra is unlike a regular credit card because it is actually a debit card. With an Extra debit card, you can build a line of credit without overspending. Extra is connected to your bank account so you can only spend what you have to make everyday purchases and at the end of every month
Extra compiles the purchases you made and reports them to credit bureaus to help build your credit history.
Accurate Credit Report
No matter how much work you put into maintaining your credit, you always have to be aware that inaccurate information can slip through the cracks and show up on your credit report. A simple late payment error can significantly drop your score. That is why checking your full credit report every month is so important. If you do find an error on your credit report and want to remove it you simply have to reach out to your lender directly about the issue. Once everything is cleared up it will some days for your score to reflect the change and go up again, so be aware that this is not an instant fix for your credit score.
Another potential error that can be fixed by reviewing your credit score has to do with authorized users. If you are an authorized user on another person’s credit account and hope that their positive credit standing will also be reflected in your score but do not see any change after a couple of cycles then you have to ensure that the credit card issuer reports the account you are authorized on to three major credit bureaus so that the account you are on becomes part of the credit report as well. Simple things like this can make a big difference when it comes to growing your credit so be sure to stay up to date and thoroughly read your credit report.
Extra was founded by Maximilian Hellerstein as a financial services company aimed at allowing people access to a line of credit. Extra is the first debit card that helps you establish a line of credit by compiling the purchases you made at the end of every month and reporting them to credit bureaus to help build your credit history. Extra can connect to over 10,000+ banks in the U.S. by using Plaid, to ensure that your banking information is safe and will never be stored. Anyone 18+ can apply since there is no credit check, and instead only a monthly payment fee that starts at just $7/month.