How to Use Your Wanderlust to Build Credit

Love to travel? Good news: There are ways to put that wanderlust to use with a travel rewards credit card.

Though travel rewards cards aren’t the easiest to get approved for as they require an excellent or good credit score, those who are able to snag one can use it to build better credit. (Just remember, before you apply it’s important to know where you stand so you don’t get turned down only to see your score suffer as a result of the inquiry.)

Travel Rewards Cards & Credit

A travel rewards credit card lets accountholders earn points or miles that can be put towards hotel stays, airfare and other travel expenses. These rewards can help travelers lower the cost of vacations, and the card itself can be a good tool for building credit.

If you make payments on time, eventually your score will begin to rise because this behavior creates a positive payment history, an important factor in credit scoring models. The card’s credit limit will also count toward your credit utilization rate, which is another big factor in scoring models. Your credit utilization rate is how much debt you carry versus your total available credit. For best credit scoring results, it’s recommended that you keep your debt below 10% and at least 30% of your credit limit(s). So if you charge a vacation and then pay most or all of the purchases off right away, your score could benefit.

You can keep track of how your usage and payments are affecting your credit by signing up for Credit.com’s free credit report summary. Beyond seeing your credit scores, you’ll be able to check how you’re doing in five key areas of your credit report that determine your credit score, including payment history, debt usage, inquiries, credit age and account mix.

Since interest rates for travel rewards cards tend to vary depending on creditworthiness, you’ll want to be mindful about carrying a balance. Doing so could hamper your credit goals, and the interest you pay could exceed whatever you’ve managed to glean from rewards. Many travel rewards cards carry annual fees, too, so you’ll want to make sure your spending habits justify the potential cost. (You can read about the best travel credit cards in America here.) Of course, making purchases on your card and paying them off quickly (and on time) will generally boost your credit.

Remember, if your credit is looking a little lackluster and you’re having a hard time qualifying for any type of credit card, you may be able to improve your scores by disputing errors on your credit report, paying down high credit card balances and limiting new credit inquiries until your score bounces back.

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

 

More on Credit Cards:

  • Credit.com’s Expert Credit Card Shopping Tips
  • How to Get a Credit Card With Bad Credit
  • An Expert Guide to Credit Cards With Rewards

Image: Geber86

The post How to Use Your Wanderlust to Build Credit appeared first on Credit.com.

Source: credit.com

International travel: Is it time to dust off the passport?

I’ve been laying low the last five months, my passport safely tucked into my desk drawer awaiting the world’s re-opening.

Like you, I’ve missed travel. Especially as summer winds down, and the sun sets a few minutes later every night, I’ve found myself daydreaming of returning to the proverbial road.

Sure, I’ve been road tripping, camping and entertaining myself domestically as far as my imagination can take me over these months. But there’s nothing that feeds my soul quite like crossing a border.

While most borders across the world are still closed to U.S. passport holders, I’ve not only started to seriously think about when an international trip might be right for me, but I also did something a little crazy this week.

I booked a trip to Mexico for September.

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What is and isn’t possible

Let’s be honest, Mexico was never high on my list of places to travel for 2020. Before COVID-19, my wandering sights were set on exploring much more exotic destinations this year like Uzbekistan, Guyana and the Apulia region of Italy, from which my family migrated.

In a world without a pandemic, my autumn travel plan was to spend late September in the Marquesas islands of French Polynesia, celebrating a big 50th birthday of one of my dearest friends and fellow points collectors.

As things have begun to slowly open up over the last months, my friend and I have had a million conversations discussing if there might be somewhere other than a Zoom birthday party where we could safely celebrate half a century. As you might remember, I have high expectations for celebrating milestone birthdays.

As we’ve contemplated if it’s safe and smart to actually think about international birthday travel right now, we set a few guidelines on our planning:

  • Places far away where we wouldn’t want to get stuck are off limits.
  • Any plans we make have to be fully cancelable.
  • There must be sunshine and water at the destination.
  • We must be able to pay with points.
  • Destinations with a 14-day arrival quarantine won’t work.
  • The Caribbean isn’t an option (if your birthday falls in the middle of an extremely active hurricane season).

With the big birthday getting closer each week, I’ve been paying more attention to possibilities as well as all the deals that keep filling up my inbox. Then, when Hyatt announced their new Work from Hyatt deal this week, it got me thinking: let’s plan a trip to Cabo.

See related: Can we safely return to sleeping in hotels?

How we’ll get there

From Portland, Oregon (my COVID-19 home base), Cabo San Lucas, Mexico, is an easy flight. There is plenty of sun and a lot of options to plan a refundable trip on points.

A large percentage of Cabo’s resorts have reopened since June, both requiring mask-wearing in public areas and limiting occupancy to 30%. And while the ban for land crossings at the Mexico-U.S. border has been extended to Sept. 21, air travel between the two countries is not (and has never been) restricted.

The birthday trip is still a month away – and in 2020, almost anything could happen in the next four weeks – but here’s what we’ve got planned:

  • One beautiful week looking at the Pacific Ocean from an oceanfront room at The Cape (a Thompson Hotel).
  • Flights to and from Portland’s PDX to Cabo San Lucas’ SJD (one way on American Airlines miles and one way on Alaska Airlines, using a cash credit from a different trip canceled due to coronavirus).

We picked The Cape because it’s a small boutique resort known for its secluded location, ocean views and amazing copper-plated freestanding tubs in the majority of its rooms. (OK, this wasn’t actually a deciding factor, but I do get very excited about a room with a good bath tub since resort spas are still closed.).

While not a Hyatt property, Thompson Hotels is an independent brand affiliated with Hyatt, meaning you can use your World of Hyatt points for a stay in a smaller, upscale property.

At 25,000 points per night, the five-night reservation came to a total of 125,000 points earned on my World of Hyatt Credit Card. In non-pandemic times I would likely consider that to be a ton of points for a single trip to Mexico, but since I haven’t used a Hyatt point in months (besides for one quick hotel experiment) and because it’s a big birthday celebration, it seems a reasonable redemption. The reservation is also refundable up to 24 hours before arrival.

American, Alaska, Delta, Southwest and United are all currently operating flights into SJD. From Portland’s PDX, I found a good redemption via Phoenix (PHX) on American for 17,500 points and $31 in taxes. As an American Airlines Executive Platinum elite member, I can cancel this award ticket at any time without penalty or fee, so booking it now was pretty risk-free.

Taxes flying out of Mexico back to the U.S. are considerably higher (to the tune of $100-plus), so on this end I opted to book a paid Alaska Airlines flight via San Jose using the balance from this year’s travel refunds. Alaska Airlines has also extended its travel waiver, allowing you to cancel any ticket booked before Sept. 8 for a full credit. Again, I felt like I had nothing to lose.

See related: How to change your travel plans when you booked with rewards

Final thoughts

Am I certain it will be safe to travel to Cabo San Lucas in September? I honestly have no idea. I have, however, future-proofed my plan from the outset, and I know that even if Icho ose to cancel this big birthday booking the day before, I have very little to lose.

I’ll be keeping my eyes on the news in Cabo and make a final decision if I feel comfortable to travel closer to departure. For now, I’m excited to at least have a plan to use my passport again and hope for some September sunshine and horizons.

Source: creditcards.com