Finances FYI Presented by JPMorgan Chase
By Aaron Allen, The Seattle Medium
Credit cards are vital tools toward building one’s credit score and a healthy financial future. When utilized responsibly, credit cards can help you establish a solid credit history, making it easier for future financing of larger purchases – like a home or vehicle.
Even if you don’t have a strong credit history, you can still qualify for a credit card. Local JPMorgan Chase VP and Sr. Business Consultant, Sheila Winston, explains how you can apply for a credit card, what to look for in a credit card and how credit cards can help you achieve your future financial goals.
“I think credit cards are a wonderful thing to have. They’re a good way to get credit started. You can get bigger things once you have a credit card such as a home, a loan for your car, bigger vehicles but it all starts off with having a credit card, it’s going to help build a credit history for you to be able to move forward,” says Winston. “So, you always want to get a credit card and in doing this, helps establish a good credit history so that when you go to purchase a larger item, like a car or a home or something, that’s going to be a more value that you already have credit established.”
How do I get started?
If you already have a checking or savings account in good standing, consider applying for a credit card at your current bank. You can apply online or visit a bank branch to work with a representative. Make sure to ask about all their credit card options.
You can also apply for a card online through any financial institution. Wherever you apply, you’ll usually need to provide your Social Security number or an individual taxpayer identification number, source(s) of income and evidence of monthly housing or rent.
Winston reiterates the steps in applying for one’s first card and what to ask for when consulting with a financial advisor.
“Well, actually one gets started by just applying for a card,” says Winston. “Usually when you go in for your first card at a bank, if you get like a checking and a savings account, you always want to make sure you ask your banker about credit cards reason why? Because credit cards are a good way to be able to maintain your expenses so that you don’t have to deplete them out of the account if you’re eligible to be able to get approved, a business credit card really helps as well since that’s my area of expertise in getting, because it’ll help me to be able to grow your business a lot faster and get a larger. items such as a loan or a line of credit that will help your business be successful.”
What should I look for in a credit card? You may find it helpful to find a card with no annual fee so you don’t have to pay money out of pocket just for carrying the card. You may want to make sure your credit card issuer reports to all three credit bureaus. This way, you can build credit history across the board and improve your chance of getting future credit cards and loans.
“Basically, you want to look for things that are going to really help you out in a sense where you’re going to get rewards points, that’s very, very important,” Winston advises. “There’s a lot of credit cards out there now in the market. Also. Another perk that you get with a credit card is no annual fee, but this can vary with different cards, so if you can find one with no annual fee, that would be a great way to get started.”
How can I use credit cards to build credit?
According to Winston, “there are multiple ways to use credit cards to help establish credit and increase your credit score. Make your payments on time and avoid “maxing out” your card — maintain a low balance by keeping your credit usage below 30% of your card’s limit.”
“Time is the best way to build credit history, so make sure you keep your credit card account open even if you don’t use the actual card much,” Winston adds.
What if I don’t have a credit history? While this likely won’t block you from getting a credit card completely, it can affect the types of cards and terms you’re approved for.
“Card issuers consider factors like your credit score, income and employment. Your credit history heavily influences your credit score, so if you don’t have a credit history, your card may come with higher interest rates. You might also have a lower credit limit because you haven’t yet proven you can pay back money on time,” says Winston. “Eventually, you can build a strong credit history through on-time payments, which may make you eligible for lower interest rates and higher credit limits.”
There are other options out there If you don’t qualify for a regular credit card, particularly for young people or students just getting started, consider starter credit cards for those new to credit, including: Student credit cards. These cards are usually built for students who haven’t had a credit card before and are looking for helpful benefits, like no annual fees.
Store credit cards. Retailers can approve applicants with little credit history for a card. Store cards usually carry a higher interest rate, but payments still become part of your credit profile. Remember to try to pay off the balance each month to help avoid raking up interest.
You can also ask to become an authorized user on someone else’s card. If the other person makes their payments on time, that will reflect on your credit report as well.
In today’s financial environment and as financial literacy has become a growing trend, according to Winston, applying for and using a credit card responsibly can be a step toward building a solid financial future. As you establish your credit history, you can use tools like Chase Credit Journey to check and monitor your credit so you can stay on track towards your financial goals.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
