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Looking to the past, it used to be a world where all you had to do to borrow money was have a firm hand shake and an honest voice. Unfortunately, to many untrustworthy borrowers have forced us into a world of checks and balances. These days, credit scores are now the new handshake and honest voice. The higher your credit score, the better the probability of you paying back a loan. With that said, I’m sure you can see why consumers with high credit scores tend to get better credit card offers, better auto loans and mortgages, well better everything financial. So, it’s no secret that those with less than excellent credit want to do what ever they can to increase their credit scores. I have found through research and personal experience that credit cards are the fastest way to build credit.

The first thing that you will want to do is find a secured credit card that you will want to use. Secured credit cards are a specialty credit card product that takes the risk away from the lenders. Essentially this is done by requiring consumers to place a security deposit on their new credit card. This security deposit will then become the consumers credit limit. Secured credit cards allow lenders to see how good of a borrower you will be without having to risk any money in the process. Using secured credit cards properly will increase your credit score and help you to qualify for more and more loans.

The key here is using your secured credit card properly. To increase your credit score, you want to show signs of financial stability. Signs of financial hardship on the other hand will decrease your credit score. With that said, here are some signs of financial stability:

1. Spending less than 50% of your credit limit: One of the best ways you can use your secured credit card to build your credit is to really monitor your spending. By spending less than 50% of your credit limit, you are showing lenders that you do not need a high credit line because you are financially stable enough to take care of your own expenses. Adversely, when consumers face financial hardships, one of the first things they will do is spend all of the available credit on their credit cards. Therefore, spending more than 50% of your credit line can have extreme adverse effects on your credit score.
2. Making payments early: Another sign of financial stability is the ability to make payments not only on time but early. One of the best things you can do to build your credit using credit cards is to make your secured credit card payment at least 2 weeks in advance every month. Because I like to go over both sides, I will simply say that not making your payments on time can lead to severe financial hardships.
3. Paying more than the minimum payment: Finally, another great sign of financial stability is the ability to pay more than the minimum payment accepted by the credit card company. A best practice is to send double the payment required or more!