Damn I'm at a 614, that shyt is up big time...
Someone explain to me the benefit of getting a credit card and how it helps with credit score. I'm illiterate to how it correlates but I get these offers monthly, if I could process exactly how it benefits me I'll do it...
It helps in a few ways:
1) Variety of credit. Part of your score is how many different ways you have credit. Credit Card + mortgage + car note is usually a good combo. This isn’t a huge factor in the score though.
2) Paying the bill on time every month helps. The biggest part of your credit score is on time payments.
3) The added available credit will decrease your credit utilization. Utilization is how much available credit you have vs how much you owe. This # is ideally under 25%. For an easy example, let’s say you have 10k in available credit, but owe 3k, your utilization is 30%. Open up a card w/ a 5K limit, but don’t use it and your utilization will go down.
WORD OF CAUTION
Don’t open up credit cards and think you have to spend. I’ve got 8 cards and about 140k in available credit. I use 2 cards monthly. My main card where all my subscriptions are, and my daily spender card that I get rewards for. I don’t use cash or my debit card. And pay off both cards in full every month.
I got the other 6 cards for flight and hotel bonuses. They replaced my daily card while I got the bonus, and they’ve been sitting in my sock drawer ever since.
IF YOU GET A CARD DO NOT INCREASE YOUR SPENDING. TREAT IT LIKE A DEBIT CARD WITH BETTER FRAUD PROTECTION.
