Credit Cards

Women are smarter credit card users than men, new data shows. Here’s why and how you can use credit to improve your score


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Women make better credit card decisions than men, new research shows.

Despite social stereotypes that have long (and incorrectly) equated women with emotional spending and impulse buying, data shows that they are often more financially savvy than their male counterparts when it comes to credit cards.

In fact, women are “significantly” more likely than men to open a credit card to build credit, while men are more likely to get their first credit card to make large purchases. That’s according to a recent study by Lantern, a personal finance site owned by SoFi, which looks at credit card usage and sentiment in the US.

Here’s more on what the experts have to say about how women build and use credit, and tips for anyone looking to start building a great credit score.

Women are less impulsive with their credit cards

Sixty-five percent of women cited building credit as their main reason for applying for a new credit card, compared to 51% of men, according to the Lantern by SoFi study.

Men, on the other hand, are more likely to display impulsive credit behaviors. For example, 66% of men say they got a credit card to receive a specific discount and cancel the card right away, compared to 47% of women. And about 30% of men requested a new card specifically for the sign-up bonus, while only 18% of women did the same.

Women also tend to carry lower balances. Nearly half of women (49%) reported having a balance of $2,500 or less, and 16% had nothing. On the other hand, 39% of men have a balance of $5,000 or more.

Women face challenges in building credit

Unfortunately, good credit habits don’t always result in credit gains for women.

According to the survey, they were twice as likely (12%) to see no improvement in their credit after getting a credit card, compared to men (6%). Men are also more successful negotiating lower interest rates: 69% of men said they got a lower interest rate after talking to their credit card issuer, compared to just 46% of women. women.

And other data shows that building and maintaining good credit can be even more challenging for women at the intersection of other groups traditionally underrepresented by the credit system, such as immigrants and people of color. In fact, black and Hispanic Americans are more likely than other races to have no credit at all, according to data from the Consumer Financial Protection Bureau. There’s also a strong correlation between income and credit: People in low-income neighborhoods are more likely to lack credit than those in higher-income neighborhoods, the study shows.

Disparities between these demographics can make it even more difficult for some women to gain access to credit and start improving their scores.

How women think about credit and financial success

Despite current gender and social disparities, FICO scores for women and men, on average, are nearly identical (704 and 705, respectively), according to the latest data from Experian.

Some research suggests that women are simply more cautious with their finances. While men are more willing to use debt to buy luxury items, women are more likely to reserve it as a tool when facing financial problems or unemployment, according to a study from American University, which analyzed the Survey of Finances of the Federal Reserve Consumer in 2018.

Women are also actively seeking their own financial education and independence, says Jeanne Kelly, credit expert and owner of Kelly Group Coaching.

“I think we want to learn more about [credit]Kelly says. “When I offer free credit education courses, I see more women sign up… I love that we are educating ourselves. And I feel like we’re using credit in a healthy way, not because we need to, because we see the big picture. And that is our financial independence.”

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How to build credit with a credit card

If you’re looking to build credit, one of the best ways to get started is with the right credit card, so you can develop healthy credit habits that help you qualify for everything from personal loans to a mortgage in the future. Here are some ways to use your card responsibly and build your score over time.

Get credit before you need it

When it comes to building credit, the sooner you start, the better. It takes time to establish credit, and even longer to build a great score. Also, the average age of your accounts is an important factor in your score: the longer you’ve kept accounts in good standing, the more creditworthy you may appear to lenders.

“Don’t wait until you need credit,” says Kristy Kim, CEO of TomoCredit. Kim came to the US from South Korea without any knowledge of the credit system. She avoided debt and credit cards, thinking it was a good strategy. When the time came and she needed a car loan, she had a hard time finding a lender who would take a chance on her.

“There’s no downside to starting early,” Kim says, even if the system can seem intimidating. “Just do what you can and start as soon as possible.”

Kelly echoes that sentiment. “You want to build credit in your own name, no matter what. And you want to build it when you don’t need it.”

Use your card for everyday purchases

Credit card debt is expensive: With an average variable APR of around 16%, even a small balance can quickly turn into long-term debt.

Fortunately, credit card debt is easy to avoid: Don’t make purchases you can’t afford or wouldn’t make if you only had a debit card in your wallet.

“Use [your credit card] for things you already need to buy,” says Kelly. “I know I have to pay for my cell phone, so I might as well link it to a credit card… We know we have to put gas in our car, no matter how expensive it is. But if you put it on the credit card, you’re using your credit. You are showing that you know how to use credit.”

always pay on time

The golden rule of responsible credit card use is to never miss an expiration date.

Payment history is the most influential factor in your credit score. And once a late payment is reported to the credit bureaus, it can stay on your credit reports for seven years.

To make sure you always pay on time, consider setting up automatic payment by connecting a bank account to your online credit account. If you prefer to track manually, set a reminder or memorize your payment due date and remember to pay at least the minimum payment each month before that date.

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