How To Not Ruin Your Credit

If you ever plan on buying a home, a new car or even just renting an apartment, you’re going to need credit. Sure, technically if you have enough cash you might not, but if you’re like most people….you probably don’t.

The stigma behind credit cards, coupled with endless horror stories of crippling debt, can definitely make it seem like credit cards and loans are things you should live without. With that being said, having healthy credit can do a world of good and if you’re smart about it a good credit score is definitely possible to attain. Here are some tips to help make that happen.

Tip #1

Don’t close a credit card account. Sure after paying off a large balance, it can be tempting to close the account for good. Doing so however reduces your available credit, which isn’t good for your overall credit score. If you don’t want to deal with the temptation of using the card, hide it somewhere, but don’t close it.

Tip #2

Don’t swear off using credit cards. You might think that not using your credit might help you avoid amassing tons of debt, but that won’t help your overall score. Responsible credit usage over time is what helps your score, so not using your credit actually hurts it.

Tip #3

Don’t ever make a late payment. Period. If you can’t pay off the entire payment, at least pay the minimum balance. Late payments can stay on your credit history for a long time and can really hurt your overall score.

Tip #3

Just because you got that shiny new Amex card with a $3,000 credit limit doesn’t mean you should let your statement close with a $2,000 balance. You should keep your credit utilization to roughly 20% of your total limit. Anything more than that can actually hurt your credit.