The title of this article sounds outlandish but using a credit card in the particular way mentioned in this article may actually help your credit score. Having a good credit score gives you the opportunity for loan and card applications to get approved and being charged lower interest rates on those loans. So it’s worth doing what you can to make sure you have a good one.
The credit bureaus like to see that you are responsible with credit and that you make repayments on time (35% of your score is based on your payment history). A good way to demonstrate a good payment history is to begin using some type of credit and paying it on time every month. An easy way of accomplishing this is to obtain a credit card or store card and begin operating it. The credit bureaus like to see a good payment history of at least 6 months in order for it to be of benefit to your credit score.
A good way to start is to get yourself a credit card or a store card with a capped credit amount of say $500. If you are concerned about getting approved for one, you could obtain a secured card. You leave a set amount of money as a deposit with the bank, say $500, and that is used as collateral against the card. So the bank has the money in case repayments are not met. You treat this card just like an ordinary credit card including repaying the amount owed by the due date.
The way to use the card is to charge something that is affordable for you to the card, then pay back by that balance by the due date of the statement. So instead of paying cash for an item, you would use the credit card to pay for it, and then use the cash you would have used to pay for the item as the repayment on the credit card. This must be paid by the due date on the statement. This regular using and repaying of your credit card establishes the good payment history you’re after.
Please don’t be foolish and go on a spending binge with this credit card and get yourself into debt. That is not the reason for getting the card. You want to establish a good repayment history which will positively affect your credit score, so keep the items you charge within your budget so the credit card can be repaid in full each month. By using the card in this manner you will achieve your aim of an improved credit score.