One of the most important parts of credit is learning how to use it correctly. Doing so will keep your credit score high and help you be approved for loans, jobs, and additional credit in the future. Here are some of the steps that you can take to ensure that you are using your credit the right way.
START SLOW
If you are trying to build your credit, it’s important to start slow. Don’t start applying for credit cards left and right because that may imply to future potential lenders that you are dependent upon credit. Start with one card and then after a couple of years of using it responsibly, apply for another one.
HAVE A PLAN
Anytime you use your credit card, you need to make sure you have a plan to pay it off. Ideally, you should be paying off the entire balance each month. Many people use a credit card in place of a debit card to make their small, daily purchases to help build their credit score. By only making the minimum payment each month, you’ll end up paying much more in interest over time.
STAY IN BALANCE
While there’s no official benchmark for credit utilization, many people follow the 30% rule. This means, at any given time, your credit balance does not exceed 30% of your available credit. Proper credit utilization accounts for about 30% of your overall credit score. If you are constantly going over this "30%" benchmark, but are making payments in full each month, consider increasing your credit limit.
PAY ON TIME
This seems like an obvious one but as the most weighted factor in your credit score at 35%, it’s an important one to remember. If you have a hard time recalling when all of your payments are due, consider setting up automatic payments or set reminders in your phones’ calendar.
