Top 10 Tips for Using Credit Wisely

By Johanna Helgeland

1.

First of all, read as much as possible about credit! It's easy to make mistakes and there's a reason so many have a lot of debt today, and that's a lack of information. This step might help you avoid mistakes and you just might save a lot of money.

2.

Pay your bills on time. This seems easy enough, but most people fall behind sometimes. Falling behind on your bills will only cost you money, and it will give you a bad credit score over time. Whatever the situation, try to pay back as many of your bills as possibly.

3.

Don't spend more then you need to! Research shows that you use more money when you pay with a credit card. When you don't have a limit, the money almost seems surreal. It's when you start thinking like this You're more likely to not be able to pay back your bills in the end of the month. Even if you don't have the money, the bills will still arrive. Be sure you don't spend more than you can afford!

4.

Be careful with loans! As mentioned previously, you should read up as much as possible about credit. This goes for loans to, or np you might find yourself in a situation where you have more debt then you hope to ever pay back.

5.

Pay off loans. If you, for whatever reason, decided to get a loan, you need to remember paying it back! A lot of people get loans not really thinking about ever paying that loan off. When that day comes, you might face some serious financial difficulties. So before you end up falling in that trap, remember that you have to pay them off some day and start doing so as soon as possible.

6.

Monitor interest rates. Make sure you get the best option possible, and don't end up paying more than you need to.

7.

Limit number of open credit cards. Having many open credit cards looks bad on your credit report, and it will make your credit score go down. One or two goes a long way.

8.

Keep in track of your debt. Make sure you don't have to pay more than 15% of your net income (after taxes) as a rule of thumb each month.

9.

Save save save! Instead of having a credit card as a last option for a sudden financial crisis, it's better to have some money saved up so you don't have to pay back extreme sums to credit card companies when you can easily avoid it.

10.

And lastly, you should at least once a year check your credit report to see what it says about you and your credit score. Above all, you need to stay on top of your finances, and checking your credit report is a great way of doing just that.