A credit card is a powerful tool when building a strong credit profile. A high credit score is critical in today’s day and age as this shows how responsible one is in managing your debt, but credit cards can be a double-edged sword.
Credit cards typically weigh more heavily on credit scores than other types of debt because they give greater insight into how you make borrowing and debt management decisions, says Rod Griffin, director of public education for credit scoring company, Experian.
"The consumer determines how much they're going to spend and how much they're going to pay each month, so there's that element of free will that you don't have with other types of debt," Griffin says.
In general, using a credit card is good for your credit score when managed correctly. Credit scoring systems want to know that you can handle different types of debt so they look for a mix of both revolving debt (loans such as credit cards that are open ended and have a variable interest rate) and installment debt (loans such as Home Loans that are paid back at regular intervals over a set period of time).
If you don't have a credit card, it is possible to show your credit worthiness and build a good credit score, if you have a mixture of other types of loans, such as Home Loans and Vehicle Asset Finance. However, getting a credit card that fits your lifestyle and managing it responsibly, is the best way of convincing other credit providers that you are a responsible lender to whom credit can be afforded.
- Pay your instalment on time
- Spend responsibly
- Understand how your credit card works and maximize its benefits
To understand more about the Virgin Money Credit Card give us a call on 0861 822 273.
Resources: Article by Tamara E.Holmes
Read more: http://www.creditcards.com