I avoided credit cards like the plague until I turned 30 something. My partner coaxed me into getting my first one just to build my credit up, which I’m actually super glad for because my neolib credit score was so low I couldn’t even get a loan for a used trash car.
I have 1 rule for my credit card and it is “the bill must be paid in full every month, no exceptions” and I have never bent that rule even once.
Now my neolib score varies between excellent and very good boy depending on how much i use the card on any given month.
Carrying a balance on a credit card to improve your credit score has been proven as a myth. The Consumer Financial Protection Bureau (CFPB) says that paying off your credit cards in full each month is actually the best way to improve your credit score and maintain excellent credit for the long haul.
It’s not my business, but if you’re in the US you really ought to have a credit card unless you’re sure you can’t manage it. Credit score is interwoven into so much of life and the easiest way to build it is with a card. Plus you end up paying less due to cashback.
Buy things you can easily pay for every month and set up autopay so you never miss a payment. Get a card with cashback on groceries and do your groceries on it since you have to buy them anyway. If you cannot trust yourself with that do something like one low cost subscription on it.
Do not miss a payment, they will fuck you over and the interest on everything is insane.
If you keep that same mindset and apply it to a credit card, you can benefit from having one. I’ve had a credit card for 10 years and always paid it off in full at the end of the month. You get a little bit of cash back from using it, you build your Neoliberal Good Consumer Score (which is useful for any future auto or home loans), and credit cards are also better protection against merchant frauds/scams. Credit card companies make so much money from people who carry balances that they don’t mind giving out these benefits to the few who pay it off monthly
get something that has no annual fee, for starters. nerdwallet has (or at least used to) have a good tool for looking at offers based on credit score, including options for people that have no credit history.
anyway, the main thing is to get something that is taken everywhere (not amex, not discover), gives you some kind of benefit (1% cash back?), and then use it for all of your purchases, and then pay it off completely each month. pay off the full balance, not just the statement balance. i have been using Mint to track my accounts, but that is going away and i haven’t figured out an alternative that meets my needs yet. it is very convenient and helpful to have an app on your phone that lets you look at your statement balance in real time and look at transactions. you can usually have it generate reports to see where your money is going. more importantly, it gives you peace of mind to know that if a fraudulent charge shows up, you can immediately call and have it flagged. though that’s rare. sometimes an app is offered by the credit card bank, but there are free alternatives.
anyway, open an account, stop carrying cash, and keep that account at $0. or, you can literally just activate the card and keep it in your sock drawer.
If you’re extremely consistent in paying off your balance every month, your credit score will still increase. Like yeah being a good debt customer looks better, but paying off your card and using it as a buffer against your checking account or bundle of cash in the mattress will cost you basically nothing because the interest never accrues.
it might make you a less attractive (read: profitable) credit card customer but shouldn’t impact your credit score itself, which is sold as a measure of likelihood of timely repayment
It’s fine so long as you make sure to
I avoided credit cards like the plague until I turned 30 something. My partner coaxed me into getting my first one just to build my credit up, which I’m actually super glad for because my neolib credit score was so low I couldn’t even get a loan for a used trash car. I have 1 rule for my credit card and it is “the bill must be paid in full every month, no exceptions” and I have never bent that rule even once. Now my neolib score varies between excellent and very good boy depending on how much i use the card on any given month.
But doesn’t paying things off immediately negatively affect your credit score?
Nope.
It’s not my business, but if you’re in the US you really ought to have a credit card unless you’re sure you can’t manage it. Credit score is interwoven into so much of life and the easiest way to build it is with a card. Plus you end up paying less due to cashback.
Damn I guess I need a credit card. What’s the best way to use it?
Buy things you can easily pay for every month and set up autopay so you never miss a payment. Get a card with cashback on groceries and do your groceries on it since you have to buy them anyway. If you cannot trust yourself with that do something like one low cost subscription on it.
Do not miss a payment, they will fuck you over and the interest on everything is insane.
I think I’m responsible enough, I’m in my late twenties and I’ve never felt the need for one, I’ve always just bought what I could afford.
If you keep that same mindset and apply it to a credit card, you can benefit from having one. I’ve had a credit card for 10 years and always paid it off in full at the end of the month. You get a little bit of cash back from using it, you build your Neoliberal Good Consumer Score (which is useful for any future auto or home loans), and credit cards are also better protection against merchant frauds/scams. Credit card companies make so much money from people who carry balances that they don’t mind giving out these benefits to the few who pay it off monthly
get something that has no annual fee, for starters. nerdwallet has (or at least used to) have a good tool for looking at offers based on credit score, including options for people that have no credit history.
anyway, the main thing is to get something that is taken everywhere (not amex, not discover), gives you some kind of benefit (1% cash back?), and then use it for all of your purchases, and then pay it off completely each month. pay off the full balance, not just the statement balance. i have been using Mint to track my accounts, but that is going away and i haven’t figured out an alternative that meets my needs yet. it is very convenient and helpful to have an app on your phone that lets you look at your statement balance in real time and look at transactions. you can usually have it generate reports to see where your money is going. more importantly, it gives you peace of mind to know that if a fraudulent charge shows up, you can immediately call and have it flagged. though that’s rare. sometimes an app is offered by the credit card bank, but there are free alternatives.
anyway, open an account, stop carrying cash, and keep that account at $0. or, you can literally just activate the card and keep it in your sock drawer.
Thanks for the help I think I’m gonna look at what’s out there. I want to build up my credit because I need to get my wife a car eventually.
I don’t think so, that’s what I do and I have a good credit score
If you’re extremely consistent in paying off your balance every month, your credit score will still increase. Like yeah being a good debt customer looks better, but paying off your card and using it as a buffer against your checking account or bundle of cash in the mattress will cost you basically nothing because the interest never accrues.
it might make you a less attractive (read: profitable) credit card customer but shouldn’t impact your credit score itself, which is sold as a measure of likelihood of timely repayment
It might, but(Edit: apparently not, see above) it’s not like I’m ever going to be able to buy a place so it seems kind of irrelevant.