Using Credit Responsibly

There is no denying that credit is convenient, but it is your responsibility as a consumer to make sure you monitor your free credit report in order to maintain your credit score at an optimal level. You do not want to have to go back and fix bad credit, but rather use credit responsibly from the outset so that you never have any issues. It might not seem like a big deal when you get your first few credit cards, but when you try to get larger ticket items such as homes or cars, it can make a big difference in the amount of interest that you pay.

Spend within Your Means

It is very easy to put something on a credit card and say you will pay it off later. Many people have been guilty of buying things on “sale” in order to save the money now and then spending way more on the item due to interest charges on their credit cards by the time things are all said and done. You should have a reasonable expectation for paying off the card at the end of the month or within a certain number of months if you are putting charges on there. Consider what your paychecks will be and don’t spend more than you can afford to pay down.

Emergencies

This is when credit seems to spin out of control. Many people use cards for emergencies and then once the flood gates are opened, they never stop. When you use a card for an emergency, give yourself a sense of perspective by checking your free credit report afterwards. Notice how this ding in your credit has influenced your number. Set about in your head a payment schedule to get the card paid down. Whether it means cutting back on going out to eat or not going to the movies, make a diligent effort to get the emergency charges off your card as quickly as possible.

Even if You Can Doesn’t Mean You Should

Many companies like to give you higher credit ratings, or talk you into the more expensive car. Just because they are offering you the higher payment option, it doesn’t mean you should use it. By putting such a burden on your income you are saddling yourself with payments. Spending up to your credit limits negatively impacts your free credit report and will ultimately cause you lots of headaches. Figure out how much you are spending monthly and think about whether you could reasonably live and make your minimum payments if you lose your job tomorrow. You don’t want to be in a situation where you cannot make payments and your credit score goes into the toilet. If you function with credit as a small advance on your salary and not an extension of your money, you will be way better off and your free credit report will reflect your fiscal responsibility.

Posted by: on Feb 13 2012 | No Comments

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