6 Tips to Use Credit to Your Advantage

A strong credit score and access to credit are powerful assets. With credit at your disposal, you can gain access to better financing terms and other money-saving resources just thanks to your status as a trustworthy borrower.

When you manage your credit wisely, you can earn rewards and save on interest—all while continuing to bump up your credit score even more. Here are six ways to maximize the advantages of good credit.

1. Take advantage of credit cards that offer rewards.

One of the biggest advantages of good credit is that it enables you to qualify for better credit cards—including ones that offer rewards as an incentive for spending with your card.

These rewards are typically paid out as a percentage of your credit card spending and can include anything from frequent flyer miles to travel vouchers to cash back applied to your balance. Over time, these rewards can help offset the cost of future purchases and put a little extra money in your pocket. 

2. Request periodic limit increases to strengthen your credit score.

Good credit can beget more good credit, especially when asking for a limit increase. If you’ve been paying your credit card bill on time and have a low credit utilization ratio, you might be eligible for a credit limit increase.

A credit limit increase can boost your credit score in a couple of ways. First, the extra available credit will lower your overall debt utilization ratio. At the same time, the increased limit will be a good sign on your credit report that you’re being a responsible borrower.

When seeking a credit limit increase, it’s important to know how the credit card company researches your credit background to determine whether you’re eligible. Many companies use a “soft inquiry” that doesn’t show up as an inquiry on your credit report, but some may perform a “hard inquiry,” which can potentially lower your credit score. There’s no consequence for soft inquiries, but you’ll want to keep hard inquiries to a minimum.

3. Ask for a lower interest rate.

Believe it or not, some credit card companies are willing to offer a lower APR to account holders who have a strong track record with the company. 

If you’re in a situation where you expect to be carrying a balance over the next few months, it’s worth asking if the company will lower your APR. Use your strong credit score to your advantage.

4. Use balance transfers and promotional APRs to reduce your interest paid on revolving credit.

If you’re carrying a balance on one or more credit cards, a balance transfer or promotional APR can be a helpful way to use your good credit to avoid paying interest. 

Balance transfers often come with a nominal percentage fee, but the savings far outweigh the cost. Meanwhile, you can use your credit background to get your credit debt and spending back under control.

5. Refinance or consolidate loans to secure better rates.

If you’re carrying debt from years ago when your credit score wasn’t as strong, you might be able to save money by refinancing or consolidating loans. 

Whether it’s a home mortgage, student loan debt, a car loan, or another type of interest-bearing debt, it might be worth contacting lenders to see if you qualify for a lower interest rate that can save you money in the long run.

6. Always pay off balances in full.

One of the best ways to protect your good credit is by paying off your credit card balance in full every month. 

You’ll continue to build up a strong track record on your credit report, and these consistent payments can earn you access to special promotions from your credit card company, including balance transfers, exclusive loan products, and credit cards that offer even better rewards than the ones you’re currently using. Plus, full payments allow you to avoid paying interest and keep your credit profile in picture-perfect shape for the future.

A good credit score is something any consumer can be proud of. Use your credit score to save on interest, improve your spending habits, earn rewards, and build an even stronger credit score over time.

Watch the video to learn our top five tips for building up your credit.

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