3) Using Your Credit Card as a Financial TOOL

Would you be interested in learning how to lower one of life's largest expenditures - INTEREST? The secret lies in using an easy to acquire instrument that some people fear and others take for granted. It's a credit card!

Up to now, a credit card has been something that you should fear because of the problems it might cause. But, if you use it correctly, you can turn it into a tool. According to Gerri Detweiler, author of the "Ultimate Credit Handbook", a Discover/Visa/Mastercard is the best indicator for loan officers how credit worthy an individual is. Turn this into your advantage by making your Discover/Visa/Mastercard a tool to show loan officers you pay on time with regularity.

How then exactly do you use it as a tool? Great question. Remember the credit report? That's what we want to keep in mind because that's the "report card" that loan officers use. Here's a list of tips:

  • Use your card every month to make small purchases and pay off the entire amount
  • Use your card instead of writing checks - you'll get credit making numerous payments on time. Credit cards, unlike checks, get recorded in your credit report.
  • Increase your credit line by showing your responsibility.
  • Pay your bill before the "due date"
  • Your goal here is to get a card in your own name and make the account look active. Doing so consistently will make your credit report look better (see Section 6 - How a loan officer looks at you). Obviously, you want to make sure that you pay on time while you are activating your account. Some methods to help you do so include:

  • Getting your bill mailed to the correct address
  • Making sure that your bill is getting to you
  • Keeping your bill in a separate folder from your "biology" notes
  • Have stamps on hand to pay bills
  • Writing the payment check right away and mail it
  • Most of these recommendations will help you avoid the typical pitfalls students fall into.

    For more pitfalls see our next section.