Your credit is like your health. In order to keep it in good condition, you need to take care of it, minimize risk, pay attention to warning signs, and make responsible decisions.
Here are six healthy credit habits to help you control your finances and build good credit.
1. Create and stick to the budget
Start by creating a budget that outlines your income and monthly expenses. This will help you figure out how much you can spend, how much debt you can afford and how much debt you can pay.
2. Only borrow money that you can afford
Show to future lenders that they can count on you as long as you can repay the money. The general rule of thumb is to use no more than one-third of the income for debt, including mortgages, credit cards, and loans (such as car loans, student loans, and credit lines). If it's useful, keep track of your expenses to make sure you're on your monthly budget.
3. Pay on time
It is very important to pay on time every month. Not only can you avoid late fees, but a large portion of your credit score depends on when you pay your bills.
4. Responsible for carrying credit card balance
Sometimes you may not be able to pay your balance in full. It's okay to write down the balance on your credit card, but if you do, make sure you pay on time every month, pay as much as possible for the minimum payment, and keep the balance at the credit limit at any time. %the following. Even if you pay your balance in full every month, getting close to your credit line is a sign for potential lenders.
5. Check your credit report at least once a year
Pay attention to your credit report. This will help you identify and correct potential high-cost errors, such as fraudulent accounts that you don't know, loans that are repaid but still appear as "open", and any incorrect personal information, such as your address, employer, or marital status.
6. Use technology and tools to avoid credit traps
Many credit card companies and banks offer free, easy-to-use tools to help you control your account. These can include
Access your account online, mobile and phone, as well as bill payment options
Statement alert via text, email or phone
Instant, free transfer to your other account
Transfer money to your account for free from most other banks and brokers