Description: The author tells us some information on the capital one online banking. He also tells us the best toll to build credit. People are often confused on how to build their credit or how to get a high score on their credit,you can find your answers on this article.
Today we’re going to talk about why credit cards are probably one of the best ways to build up your credit score. The reason why I want to talk about this is that in a lot of my credit score articles, people have brought up the points that if the other things they do can build that score up. For axample,student loans, car payments as well as mortgages. They are all relate to your credit score. The one problem is for all those other vehicles,they almost typically always include interests.
On the other hand if you look at something such as a credit card ,there is interest. But you don’t necessarily need to pay for it. I don’t recommend people for paying any interests at all. If you are new here,the goal of us is how to maximize money that you’re already spending in order to travel for free.
In this case,it doesn’t make sense to pay for interests. It might make sense to pay annual fees but only when you get more value out of it than you’re putting in. If you already have a car,if you already have student loans or a mortgage then paying those off. That’s going to help you with your credit score. But if you are starting at a point where you have none of those or maybe you only have one of them,it doesn’t make sense to add any of these specific items to increase your score.
For example,you are someone who recently graduated and you live in New York,you’re still paying off your student loans,that’s going to help. Or you want to build up a base of accounts in order to increase that score. What can you do? You can get a mortgage. Given that you’re in New York and given that you recently graduated,you can get a car. That might help. But there is something you should know about. Firstly,getting that car is very expensive. Secondly,it probably doesn’t make any sense. Thirdly,you’re paying interests on that.
The other final option is credit cards. There might be a line of credits as an option . But that’s a whole different bucket. For getting credit cards approved is relatively easy as long as you have a decent score.You can build that up by using secured cards. There are a lot of different ways to do that. Line of credits are also fine. But getting approved for these is a bit more difficult since they typically want a reason. They want to see more evidence compared to credit cards which are easy for approvals.
Bring it to another use case. If you are working in Minnesota and you didn’t go to college or you graduate from high school and you start working. You have a car because you need a car in order to do your job. You’re starting to work on your credit again. You realize that you want to travel or you want to get a mortgage in the future,so you need to get that score up. What are your choices? You can get another car again.Same reason as the New York case. It doesn’t really make sense if you don’t need that second car.
You can also get a lot of credit or credit cards or you can get a student loan. If you aren’t going back to school for a specific reason,why would you get a student loan? You’re paying interest for no reason. Both credit cards can add a bunch of total accounts and there’s no cost. We can run through a bunch of different use cases and I think you’re going to end up after seeing the same thing. If you end up getting the loan vehicle or the debt vehicle,as part of what would you do? If it makes sense to you then go for it and get that car loan or get that student loan or get that mortgage. It makes a lot of sense.
The other only way to build out that score is to build out a lot of credit cards. There are a ton of options that have no annual fees and many of them end up giving you rewards as well as help you optimizing your spend. A lot of people look at credit cards as negative vehicles. The number of cards you have are not an indication of amount of debt you have. I can have 20 cards or 30 cards. It doesn’t mean that I’m carrying a balance on any of those cards.
If anything you should be pay,all those bounces are off every single month. By having more cards,ironically you end up showing that you can deal with debt. You can be financially responsible that you’re not going to suddenly go max out all of your credit cards and buy a bunch of handbags or computer equipments or any other thing that will be deemed to financially irresponsible.
One issue that I’ve seen a lot of people who want to get mortgages run into is that they don’t have enough accounts. They end up talking to a mortgage specialist and they find out to their one credit card. It’s fine. They’re paying it off. But it’s not enough. Typically they recommend it to add two three four cards in order to build out a base. There are alternatives around this. I will probably talking about that in the future.
I realized that some people also make the argument that this whole credit game it’s kind of stupid,what’s the point of it all? I’m not disagreeing. But for me,my goal isn’t to complain about the system and this is bad or what can we do about it. It’s about you can optimize the system to make it work in your favor. The goal here is to know the rules of the game in that way you can optimize your chance of winning and maximize your outcome. You don’t want to say something such as I didn’t know about that,I guess I screwed it up.
On that note,if you are looking to apply for new cards whether you are looking to build out a base of cards or whether you want to travel for free,if you’re not sure what you want to get or what make the most sense,feel free to fill out a consultation on our website. In that way we can talk the strategy. I hope this is helpful and let me know if you have any questions. My question for you is have you heard of anyone else trying to get a car loan in order to get a better credit score? Leave your questions for me and I will try my best to help you.