How to Manage Credit Responsibly

by Guest

Good credit can be an important and valuable tool in managing living expenses. However, just because you qualify for that loan or that low APR credit card deal doesn’t mean you can throw all caution to the winds and start living the high life.

Although it can be very tempting to take advantage of a line of credit, the reality is you must manage your credit responsibly. In return, good credit can open a number of doors for you. However, in order to take full advantage of your credit, there are some good habits to establish from the beginning that will help manage your credit responsibly.

  1. Establish a budget. Don’t leave this up to chance or whim. Keep your credit purchases well within an established budget, which makes it much easier to manage payments.
  2. Keep track of purchases. It’s too easy to buy something, charge it to a credit card, and then stuff the receipt away without a second glance. Don’t develop this bad habit. Make sure the charges are correct and they match up with the statement you receive from the credit card company. Dispute any charges you feel are false or incorrect.
  3. Pay the full amount due when it is due. One of the best ways you can manage your credit responsibly is to pay on time and pay in full. This will save you hundreds, perhaps thousands, of dollars in late payment fees, increased interest rates and penalties.
  4. Keep your card to yourself. Friends or family may run into financial difficulties, but it is a very bad idea to give your card to anyone to do with what they will. Try to find another way to help out without compromising your own credit that could take years to repair.
  5. Stick with one credit card. In today’s economy, it might seem practical to have more than one credit card, but the hard reality is more than one card means more than one payment due and it’s very easy to run into trouble. Remember, just because it’s made easy or you to apply for credit cards, doesn’t mean it is a good idea to have more than one.
  6. Avoid the lure of the cash. Cash advances may come in handy, but make sure you are in dire need before using this option. Cash advances on a credit card typically carry a higher interest rate, meaning you are paying back a lot more money than you’re using.

Establishing good credit habits in the beginning can help you manage your credit effectively and responsibly. Even so, it’s never too late to get started to develop a better credit situation.

This guest post is brought to you by Financialfacts.org.

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{ 3 comments… read them below or add one }

Kara October 30, 2011 at 10:32 am

Great advice Thank you!

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Shannon Morris October 30, 2011 at 4:12 pm

Wish I had heard this advice when I was 18!

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Sandra @ Cash Advances US February 20, 2012 at 2:14 am

I would only like to add that many financial specialists now recommend checking your credit report regularly, in order to keep tabs on the information placed in it. Such meticulous checking from your side allows you to stay on top of what credit grantors-including mortgage lenders-will read about you when they check your credit history, and enables you to correct any inaccuracies and catch fraud before these problems impact your mortgage loan. Also, discussing inaccuracies may take up to 30 days to resolve, so taking care of them well in advance of applying for a mortgage is also crucial. Just keep it in mind.

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