Why You Need a Credit Card to Increase Your Credit Score

Why Is This Important?

• 30% of your credit score is how you use a credit card (or cards).
• Would you ever skip the first 30 questions on a 100-question math test? No — because you'd have to get all 70 remaining questions right just to get a C-.

A Big Myth

• Most people think you have to carry a balance on your credit cards to build your credit score.
• You do not need to carry any credit card debt to build a good credit score.

The Easy Way to Get More Points With Your First Credit Card

• Get your first card, secured or unsecured — usually with a score above 620 you can get an unsecured card.
• Secured cards require a deposit equal to your credit limit, and there's no hard inquiry for a secured card.
• Unsecured cards don't require a deposit, though some charge an annual fee, and there is a hard inquiry for an unsecured card.

To Avoid Interest Charges and Possible Negative Credit Score Impacts

• Simply put Netflix or another subscription on your card and set the card to autopay the full balance each month.
• Store the card in your sock drawer, not in your wallet.
• Bingo — you're now getting more points for the credit card use part of the test.