Building Your Credit With Credit Cards

Hi I'm Shelly and I am here with Sarah again The last time we were together we talked about building your credit history and since then Sarah and many others here at the credit union have received some questions from members

Yes, so one question I kept getting was what credit cards we offer and which credit cards are good for building your credit? Sure So, GNO offers two types of credit cards One of them is the secured credit card and the other is the unsecured credit card Now this secured credit card is fabulous to begin to establish credit because while other creditors often charge annual fees or processing fees for secured credit card even up to as much as 150 dollars Wow

GNO does not currently have any fee associated with a secured credit card to establish that And so let's say for example that you have $500 in your savings account and you want to establish credit you can put that $500 up as collateral for a secured card and that will go on your credit history and it will start to build up your credit score We also have unsecured credit cards as I mentioned and with the unsecured credit cards you know we offer great rates for our members and no annual fees and you know we do have anywhere from low limit credit cards starting at 250 dollars for a student you know as high as ten thousand just depending on where your credit is, what your income is, and that type of thing Okay, so if you're new to credit cards and you have a lower limit when can you feel comfortable to raise that limit? Well a good rule of thumb is that once you've had the credit card for at least 12 months and you've made on-time payments then you can request to have that limit increased and whether or not the limit will increase depends on how have you handled your other creditors Did you go and get yourself into a lot of debt, what is your income, those types of things, but a good rule of thumb is 12 months of solid payment history

Okay, another question I also received was what does it mean in terms of your credit if you are an authorized user on one of your parents cards? That is a great question because that can be helpful or it can also hurt and the reason is because when you're an authorized user on your parent's credit card you know that goes on to your credit history and if they're making payments on it and they're timely then it looks good on your for your FICO score it will help you to establish a payment history even though technically it's not your payment history But it can also hurt, because if your parents miss any payments, mm-hmm that's gonna be a negative on your credit report If it goes into charge-off status, you know Yes it's an authorized user' card, but here's the thing a lot of large credit card companies will look at your FICO only because it's all run through a computer system and so if you have a great FICO score then they're gonna give you a credit card pretty much, based on your parents payment history and you as an authorized user However, if it's charged off for late payments, they're gonna automatically decline you and they're not gonna look and say okay well she was only an authorized user

Here at GNO we look at the whole picture We look at everything on your credit report to determine whether or not we can grant you a credit card and so we'll take into consideration if you were an authorized user and that's something that you didn't have any control over Okay, and then finally Shelly, what is something that you wish you would have known about credit cards? Well that's a good question too, because, let me tell you they have so many different credit card options out there now From travel money cards to various types of rewards credit cards to just your plain normal credit card and I really wish I would have realized that when you when you choose to get a rewards credit card that interest rate is often so much higher than just a regular credit card And so for someone who does not pay their balance off every month the interest that you will accrue is extremely costly, and so with that being said, those rewards are there kind of a lost cause, because you could have saved a ton of money on interest

You know, for example, a 132 interest rate for a non reward creditcard versus a 24% interest rate for a rewards credit card I mean it's just so huge It's thousands of dollars in interest every year and so a person actually could save much more money by going with a traditional credit card if they know they're not going to pay off their balance every month Now if you're the one to pay off your balance every single month then yeah a rewards card is great, but if the point is what are you gonna be disciplined to do

And I wish I had known that before I started using credit cards Awesome, well thank you so much Thank you and we'll hope to see you guys if you have any other questions come into our branch talk to our account officers and open up that credit card with GNO