The Basics of Building Credit

What do credit cards do for credit scores?

Credit score arrows When used correctly, credit cards can do wonders for credit scores. Every positive payment you make on your credit card will be a good mark on your credit history. Make these payments consistently, and future lenders will see that you can be trusted with a line of credit or a loan.

However, failure to make your credit card payments could lead to disasters on your credit score. Most credit card companies are more likely to report bad credit than they are to report good credit. In other words, it only takes one mistake to make your credit score drop significantly, even if you have a great history before that.

This isn’t like school. It’s like life at home.

Think about how life works at home. If you do your chores for months at a time, your parents will eventually assume that you’re going to do your chores. The first time you break curfew, you’re grounded for two weeks. It doesn’t matter how many times you cleaned your room, put up the dishes, washed the dog, or gave Grandpa Sam his meds. You’re going to be in trouble for breaking the rules.

Credit card companies do the same thing. They don’t pat you on the back and thank you for making your payments. They put horrible marks on your credit when you don’t make your payments. That’s why it’s so important to make your credit card payments on time.