Five Smart Ways to Use Credit Wisely

Between loans, lines of credit, and credit cards, it is very easy to get into trouble with credit if you aren’t careful.  Good credit is essential in today’s world; therefore, it is important to keep your credit report clean in order to be eligible for credit in the future.  To many people, it doesn’t make sense that to get more credit you have to have active credit in your name.  Therefore, in order to be sure your credit stays healthy, there are several steps the smart consumer can take regularly in regard to their credit.


1. Don’t Over-Apply for Lines of Credit

To establish credit you only need to have a few open lines of credit.  Applying for too many credit cards and loans can cause lenders to question why there are so many requests for information on your credit report.  The best tactic you can take to establish the right amount of credit without going overboard would be to get approved for one major credit card and two department store or oil company cards.  By only have three cards it is possible for you to use them in order to build your credit rating, but not overspend and get into trouble.  You have to use your available credit, meaning that you put some items on your credit card then pay off your bill by at least sixty percent of the total due.


2. Use Your Credit but Don’t Abuse It

You have to use your available credit, meaning that you put some items on your credit card then pay off your bill by at least sixty percent of the total due.  If you simply charge a few things then pay off your entire bill at the end of the month, you aren’t demonstrating that you are able to manage credit effectively.  You have to show that you can make payments on time and be responsible for how you use your credit in order to be in a place where you can get more credit later.


3. Monitor Your Debt-to-Credit Ratio Closely

One things credit companies look at is the debt to credit ratio.  If you are heavy on either side, you run the risk of not being able to get more credit.  The best way to monitor this data is to make your payments on time and carefully go over your statements in order to see what you have and what you owe.  When you make a major purchase, your debt-to-credit ratio may be out of balance until you begin paying down that debt.  On the other hand, if you have a large amount of credit that you aren’t using, it looks as if either you just don’t use your credit or that you are uncomfortable using it.  By knowing your debt-to-credit ratio, you can see if there are problems that are developing before they negatively affect your credit score.


4. Make ALL Your Payments on Time

One of the best ways to make your credit rating look good is to make your credit and loan payments on time.  It is also important to be aware that your utilities also can be a part of your credit report so you will need to stay up on those too.  By paying on time, you demonstrate your ability to keep track of your bills and manage your financial situation responsibly. Don’t let sloppy bill paying habits show blemishes on your credit report that will stick with you for years.


5. Keep an Eye on Your Credit Report

While you don’t have to check your credit report obsessively, at least once a year, you should get a copy of your free credit report and review it for accuracy.  Everyone makes mistakes, including credit companies. If you find an error, you should dispute it immediately and being to have your report corrected.  The longer an error goes on, the harder it is to get it fixed.  If you are diligently monitoring your credit statements you may be able to find an error before it goes on for too long and get it corrected.  Before ordering a copy of your credit report, you should be aware that if you make too many requests for copies of your report, you can actually do more harm than good.  Be aware of what’s in your report, but don’t allow yourself to become obsessive about it.

Having good credit is extremely important in order to meet your future financial goals.  It is never too late or too early to work on making your credit as positive as possible.  By being aware of what make your credit positive or negative, you can actively work to make yourself a good candidate for the best rates and the most credit available to you, particularly when you need it.

Emily Cross is a professional blogger the provides information and advice for auto title loans and car title pawns. She writes for Title Max, the best place to get a tile loan with no credit check.