Have bad credit? Need to build your credit? Or just don’t know enough about credit?
It’s time to change that. It’s time to get smart about credit.
After all, your credit affects your financial health and overall wellbeing. Plus, your credit rating impacts your ability to buy a vehicle to your chances of getting approved for a mortgage or apartment rental. So, yes, it’s important to pay attention to your credit.
Your credit score is a number that represents your creditworthiness, and it’s built on your credit history. It’s a number lenders use to help them know how likely it is that they will be repaid on time. People with higher credit scores tend to have lower credit risk.
Be smart about credit
Good credit is not about having a lot of credit, but how you use your credit. Here’s a list of actions you can take to make sure you maintain a good credit score:
- Make your payments on time.
Making on-time payments is the most important factor in your credit score. The longer your payment is past due, the more your credit score will drop. 
Late payments may result in late fees. Plus, higher interest charges or unpaid bills may go to collections. A solution may be to establish automated bill payments, so you won’t miss a payment date.
- Don’t let a payment default to collections.
Allowing a payment to default is a negative as it falls under payment history and shows lenders you can’t make payments on your debts.
- Keep your credit balances low.
It goes without saying to not charge more than you can afford to repay each month. Paying in full each month keeps you from accumulating debt, helps you avoid interest charges and shows lenders you can manage your debt.
- Pay close attention to your credit scores and credit reports.
Know your score and know how your payment history impacts your score. 
Also, make sure your balances are reported correctly. Once each year, you can request a free copy of your credit report from each of the three major credit reporting agencies– Equifax, Experian and TransUnion.
- Make sure you have a variety of credit.
Bankers usually look at whether you have installment loans, credit accounts and other similar accounts. This shows you can manage credit responsibly.
- Know the fine points of opening and closing credit cards.
Closing a credit card affects the age of your credit. So, be careful about how many cards you have and how old they are. Carefully research before opening a new card or closing out an existing card.
A few other things to know is that larger payments on your debt each month will increase your score over time. Also, the older your credit history, the more credible you’ll be.
The bottom line is to carefully manage your credit card usage and build a positive credit history.
For more information about credit, check out our blog, Why Good Credit is Important.
