A credit card is one of the best tools for building and repairing credit. Making on-time payments and maintaining a credit card utilization rate under 30 percent are typically smart moves for good credit health. When it comes time to choose a new credit card, keep in mind some of these do’s and do n’ts:

What You Should Do:

  • Choose a card based on your credit. Your Approval Odds will show you the likelihood that you’ll be approved for a credit card, based on your credit score.
  • Consider a secured credit card to start. If your credit history is short, or if you’re rebuilding your credit after a foreclosure or bankruptcy, a secured credit card is a great tool to have. It’s backed by a security deposit you provide, which serves as a buffer against you defaulting on a payment.
  • Choose a card based on your spending personality. For instance, you might choose an airline credit card if you’re a frequent traveler.Read the fine print. Be sure to know what the terms and conditions are for the credit card you’re interested in before you apply.
  • Watch your credit utilization rate. When you have your new card, keep your overall credit card balances under 30 percent of your available credit limits. This will show creditors that you can use credit responsibly without relying too heavily on it.

What You Should Not Do:

  • Apply for the first credit card offer you get. Just because a card advertises a low interest rate or a great rewards package, it doesn’t mean that you’ll qualify for the card. Research other cards before making a decision about which card to apply for.
  • Miss a payment. Your credit score will only benefit from your new credit card if you maintain regular on-time payments. Just one missed payment will remain on your credit report for seven years and can severely damage your credit score.┬áSet up automatic payments or email alerts to remind you when it’s time to pay your credit card bill.
  • Carry over a balance. If you can, pay off all of your credit card in full every month, avoiding any interest payments. If the bill is too large, try paying more than your minimum payment to reduce your accrued interest payment.
  • Pay interest on a store card. While a store credit card can be a good tool in your personal finance arsenal, it’s important to remember that store credit cards typically come with high interest rates.
  • Close your other cards. Just because you qualified for a great cash back credit card, it’s not necessarily best to close your other credit cards, particularly if you have a lengthy credit history.
  • Apply for multiple cards at once. Several hard inquiries over a short period of time can make you appear desperate for credit and lower your credit score. Instead, do the research beforehand and apply for just one card at a time.
  • Max out your credit cards. Your credit card utilization rate will skyrocket, potentially lowering your credit score, and it will be more difficult to pay off your balances.

These are just a few of the do’s and don’ts of getting a new credit card. If you have any more questions, drop us a line.

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