Why Credit Cards Are One of the Best Ways to Build Credit History

The Best Tool to Build Credit

In some of my past posts about building credit, some readers have mentioned that credit cards are not the only way to build credit. There are other ways to build credit, for example, student loans, mortgage payments, and auto loans, but credit cards are one of the more accessible routes.

For the alternative ways to build credit, the main issue is that you're likely paying interest. On the other hand, credit cards do have an interest rate, but you're not charged interest if you pay off your bills in full each month.

The goal of this website is to get "free" travel or money with your everyday spend, so I don't recommend paying interest on your credit card, or it defeats the purpose of earning rewards.

If you're starting at a point where you don't have student loans, a car, or own house, then credit cards would be the logical way to begin your credit journey. It wouldn't make sense to take out debt that you can't utilize.

With credit cards, the barrier to entry is lower because you can start with a secured credit card to build your credit history.

One common misconception is that credit cards are a vehicle for debt. This is a myth as long as you are financially responsible and pay your bills in full each month. If you have more credit cards, this does not mean that you incur more debt.

By having more cards, you're demonstrating that you are financially responsible and can handle multiple lines of credit. One typical scenario a lot of subscribers run into is that they don't have enough diverse credit to get a good interest rate on an auto loan or mortgage. I recommend having at least 3 credit cards to diversify your credit.

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