Having good credit is necessary for anyone who would like to rent an apartment, buy a house, open utility accounts, open credit cards, rent a car or in some cases, get a job. Having good credit means that you have proven yourself to be a person who can borrow and repay money in a timely and agreed-upon manner. Some ways to build up your credit include using credit cards responsibly, opening a checking account and paying your bills on time. Stay out of credit trouble by keeping in mind some general rules for responsible credit use.
Treat Credit Cards Like Cash
The best way to avoid getting into debt with credit cards is to spend only what you could afford to spend if you were paying with cash. Put that money aside each time you shop, and when the credit card bill comes in, pay it off entirely. Creditcards.com suggests thinking of credit cards as a loan that you must pay back in 30 days. Do not be tempted to pay only the minimum balance on your credit cards; this will cause you to accrue finance charges and will end up costing you money in the long run. Keep track of what you have charged on your credit card throughout the month to avoid unpleasant surprises when the bill comes in.
Make a Budget
The Provident Credit Union stresses the importance of making and keeping to a budget. (See the link to their budget worksheet in the Resources section.) Having a budget will help you avoid credit-ruining late payments and missed payments, and will also prevent you from using your credit card when you cannot afford to pay it off.
Contact Creditors, if Necessary
If you experience the loss of your job, illness or other circumstances that make paying your bills on time impossible, call your creditors immediately. The Provident Credit Union states that if you are unable to pay your bills, your creditors may make arrangements with you to gradually catch up on your payments. Stick to the agreement that you have made, and if for some reason you cannot, call back before the next payment is due.
Avoid Common Mistakes
Creditcards.com points out several mistakes to avoid when using credit cards. Do not give out the number to anyone to avoid unauthorized purchases. Always compare the billing statement with your list of what you have purchased using credit. Notify your credit card company immediately if there are any discrepancies. Don't be tempted to use one credit card to pay off another, as this will often lead to deeper debt problems.
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