Well done, you landed yourself a real job, buddy. You have officially become an adult and grownup and now it’s high time you were taking care of your credit score since it will play the most significant role in getting your place to live from landlords or loan from lenders.
The most critical controllable variable is the credit utilization. Put simply, it’s the proportion of your limit that you use. Thus, in case you have $1,000 limit and spend $500, your utilization equals 50%. The bank considers acceptable utilization below 30%.
You might think that it is good to use your card as much as possible in order to prove that you are responsible. No, charging your Chase or Discover to the full extent and then paying it back negatively affects your credit score. Big balances mean that you are a person who badly needs money. Therefore, spend money sensibly.
Here comes the easiest hack – paying your balance before the statement date. It might sound strange that you pay your balance on the due date, however, it is too late. The bank reports about your balance to the bureau on the statement closing date. Thus, if you pay off your balance before the statement closing date, the report will reflect a low balance.
You may put a reminder to the calendar for your statement closing date or just pay off your charges right after you get your statement. Treat your credit card like a debit one and spend money only if you have enough of them on your checking account.
Try to increase your credit limit if it is too low. After six months of your good behavior you may ask for its raise. The applications of Capital One and Amex make it easy. Increasing your limit decreases your credit utilization right away. However, it does not mean that you should increase spending.
Financial management needs a lot of time and efforts, but keeping your balances low is mathematics. And do not allow your utilization to influence your apartment hunt negatively.