Sunday, October 30, 2011

How to Properly Manage Credit

Begin with only using one credit card: Typically first time credit card holders accumulate a wide variety of credit cards within their first couple of years using credit. Do not fall into this deconstructive habit. The more credit you have, the more you’ll end up using in reality. Learn how to be responsible with one credit card before you decide to even apply for any additional credit cards. When searching for new cards try to stay away from credit provided by department stores.

Charge only what you know you can afford to actually pay: When you are charging only what you can actually afford, it lets potential lenders and creditors know that you have the positive attributes of a responsible borrower. You’ll find that it will be easier to borrow money and have the opportunity to obtain new credit when you show that you know how to only borrow what you can pay back to lenders. Only charging what you know you can afford helps you steer clear of excessive debt.

Use a portion of the credit you are given: Maxing out your credit cards, or coming very close to doing so, is one of the most irresponsible ways of using credit. Chances are that you can’t afford to pay off a maxed out credit card balance. The lenders know that borrowers who completely max out their cards frequently have difficulty repaying what they’ve borrowed against. Stay below 50% of the credit limit you are given. It is highly suggested to even stay below 30% if possible.

Learn how to correctly carry a balance: Having a credit balance is not bad as long as you do it correctly. It is highly recommended that you make more than the minimum payment requested of you each month to pay off your balance as quickly as possible. At all costs avoid making late credit card payments and always keep your balance at a reasonable level. If you properly follow these steps, carrying a balance won’t hurt your credit.

Completely pay the balance on time: Responsibly paying off your balance each month shows that you’re capable of paying bills, something creditors and lenders want to see from its customers. Since a large part of your credit score includes timeliness of your payments, paying your balance on time improves your credit score.


  1. Good advice. Lynsey and I found ourselves on dangerous ground during our first year of marriage. We had multiple credit cards with high balances. Finally, when we'd had enough we did some research on how to get out of debt and were able to get all of our cards payed off.

    In January of this year we set out on a mission to improve our credit scores. We called each of our credit card companies and requested credit limit increases. Then we started using credit cards for every purchase we made, but only if we had money in the bank to pay for it. Now after we pay for our groceries at the store I hand Lynsey the receipt and she gets out her iPhone. By the time we get to the car she has transferred money from the bank to the credit card and our credit card balance goes back to zero. We also make sure to use each of our credit cards at least once every few months so that the credit card companies have good things to report about us. Using this method we have now raised our credit scores to the "excellent" status and have already seen the fruits of our labor. When we signed up for a Costco membership last month and they offered us an Amex card for extra benefits at the store we signed up and qualified for a $10,000 balance. A year ago my credit score only qualified me for a $500 balance!

    We use the Miles by Discover card for almost every purchase because you earn double miles on every purchase plus quadruple miles on most internet purchases. We signed up for that card in January and by June we had earned enough miles for a $350 plane ticket! Also their miles can be redeemed for anything in any form, even cash.

  2. Definitely a great plan in place. Thanks for your comment and for visiting the blog!