You know it is important to have at least one credit card, but what is the credit and how can you increase it?
A credit card, rather than a tool to use when you don’t have money (something you should never do if you can’t afford it within a reasonable time), will help you in the important moments of your life like buying your first car and even a house . And what is essential to request it? A good track record and credit score.
Here are the 10 most frequently asked questions about credit cards so you know where you can start:
What do I need to get a credit card?
You will have to present your personal information, identification, social security and current income information. You can get more information and request it very easily.
Is there a minimum age to apply for a credit card?
In Puerto Rico a minimum age of 21 years is required to independently request your credit card. However, people under 21 can be added as authorized users to their parents’ cards. Or if you are a student, as co-debtor with your father, mother or legal guardian as principal.
How many credit cards should I have?
It all depends on who you ask. Some people will tell you, “None!”, But credit cards are very good for building your credit history and increasing your FICA score if you use them correctly. You can start with one and ask for the minimum ($ 500), only using up to a maximum of 30% of the credit line. That is, in the case of a $ 500 card, you should not keep balances greater than $ 150.
Later, when you have become accustomed to keeping your card active with less than 30% use, you can consider taking out a second card with a “reward program” (usually they are points for airlines, hotels, among others) and start using it in the same way (a maximum of 30% use).
I don’t use my credit card, should I close it?
We have the wrong idea that closing or canceling a credit card is something positive for our credit, when in reality, it is the opposite. A portion of your credit score is calculated by the amount of credit you have available and you are using versus the credit you have available unused. So if you have $ 10,000 in credit and $ 5,000 in debt, but you close a $ 2,000 card, your credit score is reduced by having $ 8,000 of credit available with that same $ 5,000 debt.
In the same way, credit cards that are older with you have more weight when it comes to increasing your score than new cards.
What things affect my credit negatively?
Making your payments late or forgetting to make a payment affects your credit. In the same way, taking cash or “cash advance” from a credit card makes you incur higher interest, which can be a problem for you when paying off the debt, because the balance can rise considerably in Little time.
What is the best way to pay off my student loan?
Consolidating and refinancing your student loan is a good way to reduce your interests and ensure that every payment you issue goes to the current debt (the loan) instead of the interest. You just have to refinance student loans that allow you to deduct your interest rate.
Every month I balance what I use on my credit card. This helps me?
It depends. The trick is knowing when your card billing cycle closes. If you pay off the debt before the billing cycle is completed, the credit card company cannot report balance on your side, and you do not accumulate the credit. However, when the cycle closes and your bill is issued, that amount is already reported and you can pay it immediately. In this way you contribute to your good credit history and candles for your financial health simultaneously.
Another effective way to pay off your debt is to make more than the minimum monthly payment as long as you have an extra money. Increases and labor bonuses contribute to the debt and pay it off in less time.
I have been told to transfer my debt to a card with 0% interest. Why?
Transferring your entire debt to a credit card with 0% interest can be of great help if you have the money to pay off such debt in the term that the card does not accumulate interest. For example, you transferred $ 500 to a new credit card with 0% interest for one year. A year gives you to pay that $ 500?
Make sure that after that promotion period, your card’s regular interest rate is beneficial to you.
Is it important to read the legal ones on credit cards?
Small letters of credit card applications can be scary, we know that. But read them! Find out the terms and conditions so that it doesn’t surprise you.
I have a lot of debts and my credit score is very bad. What I can do?
The most important thing is that you try to get a free financial consultation on how to settle your debts and explore the possibility of a credit restoration program.
Do you want to know what your options are? Access here for more credit information. Visit our Banking24/7 section for tips that will help you achieve your independence.