Something can definitely be said for knowing actually what you are getting yourself into before you start using a credit card. With so many credit cards on the market as well as so many rules attached to their usage, you will want to educate yourself about effective credit card management as well as examine your own spending practices.
If you are already in debt to a certain extent, yet you want to improve your credit score, taking the time to learn about proper credit card management will absolutely be a good decision for you as you move forward as a credit card user – as they say, better late than never!
Credit cards, if used responsibly can certainly help you improve your credit score. On the other hand, with improper use they can quickly lead to bad credit and unruly finances. Therefore, it is beneficial to have some strategies in place that will guide you towards more skilled credit card consumption. Here are 3 tips to using your credit card – without hurting your rating.
#1: Making Regular Payments
Perhaps one of the best methods of engaging in proper credit card management is to consistently stay on top of your monthly payments. What this credit card behaviour ultimately does is not only to show your reliability as a borrower, it can also contribute to a strong and healthy credit history. If, however you do miss a payment or submit a late payment even, your credit score will suffer.
On top of meeting all the monthly payment deadlines, it is also a good idea to plan to pay off the total balance on your credit card each month. Of course, if you can not pay it off in full and it is more realistic that you will carry a balance from month to month, then making sure you make regular payments each time of at least the minimum payment will be necessary.
Since carrying a balance does mean that you will be accruing interest each month, you may want to look at lowering the amount of interest you are being charged by paying off more than just the minimum balance. Even if you double this payment or pay just a little above the minimum monthly balance, at least you are reducing your interest and also continuing to lower your debt load.
This strategy, while not as ideal as paying off your credit balance in full, it can however help you maintain a better credit score – versus the alternative where your credit balance only continues to grow and grow.
#2: Avoid Charging on Impulse
Another method of maintaining a good credit score is to monitor your spending. This means not spending beyond your means and definitely refraining from impulse buying patterns. One of the fastest ways of piling on the credit card debt is to continue to use your credit card, when you don’t have or won’t have the available funds in your bank account to pay it off shortly thereafter.
In order to avoid buying on impulse, it it best to take a pause and ask yourself if this is an item you really need to buy. More specifically, is it something you need to buy NOW? In other words, if it is something you must buy, can you wait and save some money for it instead of charging it to your credit card? Ultimately, if it is still something you want to buy after a day or two, then perhaps setting aside some additional money and buying at a slightly later date is the better choices – and if not then you can move on.
#3: Rethink Applying for Another Credit Card
While at first glance applying for a new credit card may make sense as you are running out of credit on your first card. However, it is important to mention that this is certainly not a fix and can lead to more uncontrolled debt. By examining the situation a little more thoroughly you will then see that you should instead focus on paying down the card you already have. This process can then set the tone for lowering your rating, instead of adding to it.
Additionally, applying for more credit – known as a hard inquiry can lead to a lower credit rating as well. The reason the for this is the fact that even making a credit inquiry can pose a risk to your credit because it is often indicative of a borrower who is struggling to pay off their credit – not to mention solely relying too much on credit when making purchases.
Therefore, it is wise to avoid seeking out another credit card or credit source, especially too soon after another inquiry has been made. Also, a general rule of thumb is to give yourself some time to pay off some of your already used up credit prior to applying for more.
Once again, taking the time to review your own spending patterns can prove to do a world of good when it comes to maintaining proper credit card usage. If you need to use a credit card, yet are concerned your spending will get out of control, consider devising a new and improved budget that will enable you to lessen your risk of spending beyond your means by tracking all aspects of your spending.
In the end, if in fact you do find your credit card balance is continuously growing, it might be best to stop using the card altogether. Once you have your spending and your debt under control a bit more – then you can likely start using it again in moderation. Of course, it helps to do your best to stick to the above mentioned tips as well as any other conscientious credit card management strategies you may come across in your financial travels.