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Credit: Use It Wisely (or Lose It)

By: steve clayton

What do you think of right away when credit is the topic of conversation? Logically, it would be credit cards and maximum limits. When thinking credit, there are two rules: discipline and control.

Why did the bank not approve our application for a loan? Did we ever think that the reason could have something to do with how our credit behavior hasn't exactly been a model of discipline and prudence?

Financial planners often say that individuals with high-income jobs occupying responsible positions are often those who have done things to spoil their credit record. It's a pity because they are the ones who would most likely get approved quickly for a loan, but their high-paying jobs can cause them to be careless with their money.

Someone once said that it's the low-income person who pays his bills on time.

What kind of lessons can we learn from responsible spenders like that poor man who pays his bills on time? In what way do we spoil our credit and our reputation?

Possession of multiple credit cards - is it really necessary to have more than three credit cards? Do you find it difficult to say no each time a department store representative approaches you and says "it only takes ten minutes to fill out this application form?" The store will even throw in a bonus gift if you apply. It's a little trick that's called "securing wallet share" so that with the card fitting snugly in your wallet, you're more likely to purchase on credit;

Failure to make deadline payments - people are mistaken when they think that one or two missed payments won't be noticed. First, they're wrong; second, missing payments is habit forming! When people are short of cash, they'd much rather wait until the next payday to make a late payment on a credit card. This non-payment is reported by your credit card provider to the credit bureau. It is always better to meet the minimum payment, or if in a crunch, to make a short payment than not making any payment at all.

Maximum use of credit limits - this is also known as "maxing out" your credit card limit or your revolving line of credit. Instead of engaging in frivolous spending, why not leave room in your credit limit for a real emergency? The true meaning of credit has changed over the years; these days, people use credit to satisfy a whim or caprice, and not to cover urgent needs.

Frequent requests for increasing credit limits - this habit is just as bad as the preceding one we discussed. It's a cause-and-effect phenomenon. People are maxed out, and when the shopping bug hits them again, they call their credit card company requesting an increase in their credit limit. There's nothing wrong with asking for an increase - provided you urgently need the funds and make more than the minimum payments required.

Making a budget and forgetting about it. People start with good intentions by creating a budget. A weeks down the road, they forget their good intentions and have a relapse. Back into debt again and again. Why? No budget!

Be Credit-Savvy

One thing to bear in mind: avoid asking for credit too often. Debt will not make you rich. It can spell financial ruin long term.

Steps you can take to build healthy credit:

One, keep and maintain a maximum of three credit cards and make timely payments

Step # 2: stay away from any additional offers of credit. Spend money you have today prudently, don't spend tomorrow's money.

Three, review your credit report at least once a year. Challenge any inaccuracies you read in the report

Fourth, instead of skipping a deadline payment, why not try to make some sort of payment, even if it's under the minimum payment? This is a lot better than not making any payment.

Five, if you can pay for products and services with cash or debit card, do so; leave your credit cards at home

Step # 6: Control your spending. Act like a frugal person and don't fall for all those products promising to make your life more comfortable.

Article Source: Main Articles

Steven J. Talrechi has produced articles about credit reporting and credit reporting practices for over 10 years. He specializes in helping people obtain a 2nd chance checking account and 2nd chance bank account when they have been declined by other banks.

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