I Raised My Credit Score 125 Points And Earned $2,000 At The Same Time. This Is The Playbook.

There’s a reason credit cards tend to get such a bad reputation. A lot of people manage to get themselves into serious debt by racking up balances on credit cards and carrying them for a long time.

The problem with credit cards is that when you don’t pay them in full, you rack up interest on your balances. From there, the longer it takes to pay off that debt, the more it costs you.

But when used wisely, credit cards can be a helpful financial tool, as this Reddit poster illustrates.

The upside of using credit cards

It’s all too easy to fall into the trap of charging expenses on your credit cards and worrying about the balances later. But this Reddit poster took a different approach.

What they did was apply for credit cards strategically and pay off their balances in a timely manner. As a result, they managed to raise their credit score from a 590, which isn’t so great, to a 715, which is a much more respectable score.

You’re more likely to get approved for a loan with a 715 than a 590. And for context, a 590 is typically too low a credit score to qualify for a conventional mortgage.

Not only that, but the poster managed to earn themself $2,000 worth of credit card rewards. That’s a pretty sweet deal.

How to use credit cards to your advantage

The poster above isn’t the only one who can benefit from credit cards. You, too, can use them to your advantage. But for credit cards to be beneficial, you need to follow these ground rules:

• Pay your balances on time and in full every single month
• Check your balances on a regular basis to make sure they aren’t getting too high, and stop charging once you’re in the danger zone
• Choose credit cards that don’t charge an annual fee unless they offer a perk that makes up for it
• Use the right credit cards in the right places — for example, if one of your cards gives you extra cash back at the pump, make sure to swipe it when you get gas
• Don’t apply for too many new credit cards at the same time, as that could damage your credit score and open the door to excessive spending
• Don’t overspend on credit cards just to collect a sign-up bonus — you could end up accumulating so much interest that you negate the value of that bonus completely

Remember, owing money on a credit card isn’t how you build credit. You build credit by paying your credit card bills on time, and by keeping your outstanding credit card balances low relative to your total spending limit (otherwise known as maintain a low credit utilization). You can also build credit by keeping credit card accounts in good standing open for many years.

If you follow these rules, you can come out a winner in the context of credit cards — and avoid the debt trap so many consumers unfortunately fall into.