Credit Cards - can they build credit??

Question:
Do Credit Cards help to build a credit history?

Answer:
Having a credit card in your name will
build your credit history because of the monthly payments you are
required to make. Building a good credit history contributes to having
a higher credit score.

Function

Each
month, the credit card company will report whether you paid your bill
as agreed. This information will go on your credit report.

Considerations

Your
credit card company will report whether your account is current each
month, whether you have used the card or not. For example, even if you
did not spend any money and your balance equals $0, you will still be
reported as being on time on your credit report.

Significance

Your
payment history accounts for 35 percent of your credit score, so using
credit wisely has a major impact on your credit score.

Time Frame

Credit cards count towards the length of your credit history, which accounts for 15 percent of your credit score.

Importance of a High Credit Score

Lenders
use your credit score as one factor in determining whether to issue you
a loan. If you are approved, a higher credit score may qualify you for
a lower interest rate.

This post was originally from the Answer Bag - Click here for full  article

This entry was posted on 27. January 2010 at 22:24 and is filed under Advise. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.