Christina Mumper
- Niké Ojekunle previously used her credit card in ways that negatively impacted her credit score.
- She began using her credit card to make small purchases and pay it off in full twice a month.
- She also automated her payments and kept her balance below 30% of her credit limit.
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When Niké Ojekunle, a Los Angeles fashion and skincare blogger at Specs and Blazers, was in her 20s, she used her credit card in ways she didn’t realize would negatively impact her credit score. She often made late payments or paid only the minimum due. She would also carry a balance that was close to her credit limit.
“As an immigrant, and also in African-American culture in general, we’re not really taught the power of credit. We’re taught to stay away from it or really just destroy it, like nothing in between. So, I really want to use my platform to teach people that it’s OK to use credit,” Ojekunle says.
It wasn’t until she had the desire to purchase a home that she realized having good credit history was important for getting a better interest rate on a mortgage or any long-term loan. That awareness made her want to fix her credit score.
The simple techniques she learned and implements to this day continue to improve her credit score. Here’s what she does:
She uses her credit card like a debit card
In the past, Ojekunle would avoid using her credit card for everyday purchases. In her mind, it was reserved for emergencies where she’d need to make a big payment that she didn’t have cash on hand for. That meant, in months when she couldn’t afford her rent, she’d use her credit card to pay it. If she had a car payment she couldn’t make, or a medical bill she couldn’t afford to pay upfront, she also used her credit card. These big charges meant she was nearing her credit limit every time she used her card.
She eventually learned that using her Chase Sapphire Preferred® Card instead of her debit card for small daily purchases like food and gas was a great way to rebuild her credit. Since the charges are small, she’s able to pay her balance in full on a more frequent basis.
“I wouldn’t use my credit card because I was always afraid of it, which doesn’t help because, with credit, you have to show that you use it and then pay it back,” Ojekunle told Insider.
She stays below 30% of her credit limit
She set a personal marker for herself, which was to stay below 30% of her credit limit. She logs into her Chase account daily to check her balance. In the event she is nearing that limit, she can revert back to using her debit card.
“I was taught the lower the credit utilization before your due date, the better. So, for example, if your credit card limit was $1,000, you should keep your balance to $300,” Ojekunle told Insider.
Setting a spending limit is crucial because one of the five main factors that make up a FICO score is the amount of money that is owed relative to the credit limit. This is because lenders may view a high credit balance as a sign that you may be higher-risk as a borrower. Experian’s experts also recommend keeping your credit balance below 30%.
She pays her credit card balance in full twice a month
Paying her balance off every few weeks rather than every month is another habit Ojekunle picked up along her journey. This keeps her from accumulating a high balance on her statement’s closing date. The process also keeps her credit utilization ratio well below 30%.
Getting the payments out of the way sooner is a great habit because it commits available funds to paying off the debt, and reduces the risk of spending that money on other things if you push the responsibility into the future.
Additionally, interest charges accumulate each day, based on your daily balance. Making early payments, even before the due date, lowers the average daily balance, which can reduce your interest charges significantly if you’re not able to pay your bill in full.
She automates her credit card payments
In the past, Ojekunle would mark down her payment dates on a calendar until she realized she could automate her payments through her bank every month. Now, she has it set up so that the full amount owed gets paid on the 9th and 23rd of each month.
Automating your payments is a great way to take the sting out of paying off a debt every month. It also reduces the risk of forgetting to make a payment by its due date, as long as you make sure to always have enough funds in your bank account to cover the balance owed.
Otherwise, you could incur further charges from a payment bouncing. You can set up payments through your credit card company’s bill payment feature online, with the option of setting it up to make the minimum payment or the full balance. If you choose the latter option, just be sure to check your balance and activity regularly.
Laila Maidan is the personal-finance-storytelling fellow at Insider. She covers personal stories about peoples’ financial journeys. Have a story about a financial accomplishment to share? Email lhmaidan@insider.com.
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