Maintaining Good Credit


Managing credit can be a challenge. There's no better way to keep out of debt than by tracking your spending and sticking to a budget. A budget can help you control your finances, decrease your debt, and build a strong credit history. Keeping track of the checks or "drafts" you've written and track what you owe. Make sure your statement is accurate. Review your monthly statement when it arrives, check for any possible discrepancies and be sure to report them immediately.

Always pay at least your Total Minimum Due. Your payment should be received by the creditor on, or before, the due date printed on your statement to keep your account in good standing. Don't skip any payments and try to pay more than the minimum or even the whole balance each month. New spending and carry-over balances combine to increase the amount of your average daily balance - and the finance charges you will owe. You can decrease this expense by paying down your balance as much as possible each month.

Do not exceed your credit limit. Your Available Credit is how much credit you have left (your Credit Limit minus your Outstanding Balance). You should always keep your balance lower than your credit limit. Be sure to add any charges you made after your monthly statement's closing date to your Outstanding Balance to find out how much credit you really have left (Available Credit). Keep at least a 15% cushion of Available Credit in your account in case of emergency.

Stick to a budget. In general, less than 10% of your monthly income should go towards paying off your lines of credit, personal loans or credit card bills. If you are paying more, it's time to reconsider your monthly spending. Watch large impulse buys. These buys are especially hard to pay off.

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