Mammoth AwardsCredit can be scary, but the truth is, it can be your friend. How? By allowing you to make purchases in the future without having to fork over a ton of your cash upfront.
The ability to secure loans, credit cards, and low interest rates in the future depends on your borrowing behavior now. To ensure you’re seen as a good borrower by creditors, be sure to avoid the following mistakes that tend to plague credit newbies.
1. Accepting any credit card that comes your way.
Getting your first batch of credit cards may be a priority if you aim to build a solid credit history. You need to be sure those cards are in your best interest, however.
You may receive credit card offers that claim there’s no need to check your credit score. These often come with a catch that includes high interest rates and high fees.
Beware of such offers and do not accept them until you read all of the fine print.
2. Applying for every credit card you see.
Sitting on your hands won’t get you approved for credit, but that doesn’t mean you should overdo it when it comes to applications. Loads of rejected applications can negatively impact your credit score.
Even getting accepted for several cards at once could be seen as a red flag. Instead of rushing, aim to build your credit slowly.
3. Applying for cards without a strategy.
Getting denied for a credit card isn’t the end of the world. It doesn’t mean you should apply for other cards without thinking things through, though.
Let’s say you get rejected for a major credit card. Don’t apply for other similar cards that are likely to result in the same decision. Aim for cards you’re likely to get accepted for, such as secured cards or store credit cards instead.
In short, you want to avoid an endless routine of apply/deny.
4. Thinking prepaid cards build a credit history.
A prepaid card can come in handy for online purchases, paying at the gas pump, and the like. It won’t build your credit history, though.
In other words, don’t use one for a year thinking your credit is slowly climbing. It’s not.
5. Giving up after being turned down.
Don’t get flustered from rejection. Speak to lenders and ask them what’s the best move for your situation. In doing so, you may find a direct path towards approval versus tackling this sometimes tough task on your own.
When speaking with the lender, mention any payment history you have, such as from utility bills or rent. If it’s solid, it could help you receive credit.
6. Taking on bad credit habits from the start.
Once you get approved for credit, guard it with good habits. Keep your card balance low. Pay off the balance in full, if you can. Last, but not least, make every payment on time.
By following these simple rules, you’ll make obtaining better credit cards and loans in the future a much simpler task.
