Credit Cards To Build Credit | Pros And Cons | Refresh Financial

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Want a credit card to build credit? Read this first!

credit card to build credit

If you've come across this post, it's likely you are considering getting your hands on a credit card to build credit. Great news! Credit cards are one of the best ways to build your credit score. Why? They are considered a type of revolving credit which reports to the credit bureaus.

There are several pros to using a credit card to build credit:

  1. Spending flexibility. With a credit card, you choose how much you spend each month.
  2. Learn how to manage credit. You can learn how to manage credit by making your payments on time and using a small portion of your card's credit limit.
  3. They often come with rewards.  If you have a good credit score, you can often get approved for a credit card that comes with rewards such as cash back or miles points.

However, there are also some disadvantages of using a credit card to build credit:

  1. You risk going into debt. A credit card is a great tool for building credit and teaching you how to manage credit. However, if not used properly, a credit card can do the opposite and actually bring your score down. If you're likely to be tempted to spend all of your available credit, then a credit card to build credit might not be the best idea.
  2. You may not be approved. If you've never had any credit products before, or if you have poor credit, you might not even be approved for a credit card.

What other options are there if a credit card isn't going to work for you to build credit?

Consider a secured card. Secured cards are a great alternative to a regular credit card. They work in the same way, by reporting your payments to the credit bureaus, and by taking your credit usage percentage into account, however, there is little to no risk of going into debt. Secured cards require you to make a refundable security deposit, sometimes equal to the amount of your credit limit. They are not the same as pre-paid credit cards which do not report to the credit bureaus, and therefore do not affect your credit score.

Consider a credit builder loan. If building your credit score is your top priority, there are other tools available aside from credit cards. A credit builder loan is a set-it-and-forget it program. No need to remember to pay a bill each month, no annual fees to worry about. As with a secured credit card, there is no risk of going in to debt while your build your credit score. Plus, at the end of the program you will have a nice sum of money that you can take out of your account and spend on whatever you like! You save money, while building your credit score!

So, if you are looking for a credit card to build credit, remember, there are other options available that don't involve going into debt to get a new credit score! A secured card or a credit builder loan - both available at Refresh Financial - are very effective credit building tools!

Learn more about the credit building options at Refresh - apply online and get approved in less than 20 minutes!


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