It has become important over the years to know exactly what a person should do regarding their credit scores. There has been a lot of information that can be confusing regarding your credit. Knowing what will help and what will hurt your credit scores can be important. Using credit wisely is the only sure thing to help control your credit.
Not knowing exactly how your credit score is calculated it can be complicated to know how use credit wisely. Here are some tips that might help you to keep your scores headed in the right direction.
Watch Your Credit
There are plenty of ways for you to check your credit regularly, and free. There are three different credit bureaus that a person needs to look into in order to get an accurate picture of their credit score. This is something that you can check on once a year, checking into your score is one of the best ways to spot identity theft.
While watching your credit score you want to be sure not to cause any extra problems by increasing your credit too much. Every time you apply for a credit card at the register, it can hurt your credit. It is easy to think that you will be able to pay it off right away, or that there is no monetary costs to you if apply for the credit. However, it is important for you to be very choosy with which ones that you wish to apply and use credit wisely. Try to find those cards that offer ongoing savings. Remember that store credits tend to a higher interest rate and make sure that you are always able to pay off the card to ensure continued positive credit scores.
Paying with Credit, but Not Too Much
It sounds strange but you should use your credit cards. Even though it is common to hear that, you should not use your credit cards this is not always true. You really want to keep your balances below 30% of your total limit. It is also important to remember to not go above 50% of your limit. It can be confusing to some that the creditor offer you more credit than you are supposed to use, however it is done to calculate what healthy credit use actually is. To give yourself a healthy limit is sure to keep your balance where it should be.
Using credit wisely can help to improve your credit score, but you actually have to use it. This is best done by picking something that you normally would buy and then when the bill comes be sure to pay it off in full. This will help to strengthen your credit rating by paying off your card, as well as using to ensure a healthy credit score.
It is important to make sure you have a clear understanding on how making payments works. You want to be sure to make all of your payments on time. You payment history makes up the largest portion of your credit history. Some payments tend to have more weight than others do but payments are still the most important. It is important to know that all the missed payments have a large negative repercussion.
It can be a problem if you decide to bulk up on your payments as well. It can be harmful to your credit if you make payments that are designed to reduce your balance in an unhealthy rate. Many times we just want there to be no balance, but it is important to create a plan that can help you to accomplish that in a slower realistic fashion. When a lump sum is made, it can signal negative comments from the creditors to your credit report depending on if they claim it as a pay off or just a payment. It is also important to be sure to not make so large a payment that you will be using your other credit to balance the large payment you made. Keep your payments stable across the board in order to use credit wisely.
Remember that mistakes can happen even if you are determined to use credit wisely. However, this does not mean that it is time to throw in the towel. Even though many people have been able to learn to live without credit, it is not always the best thing to do. Remember that credit can be repaired as long as you are willing. Repairing credit can be a challenge and seem to take forever, however it is well worth it.
Bad credit can follow you for 7 to 10 years, but the further away from the negative moments the better your score will get. As you use credit wisely, make payments on time, and watch out for any changes you will find your scores changing in the right direction.