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How To Maintain Your Best Credit History

Apr 20, 2008
Once you have established a credit history, you should follow these basic credit tips to make sure you maintain and develop the best credit history you can:

Be patient; don't accept all offers that come to you in the mail. Once you have credit, you will start to receive tempting offers to apply for credit cards in the mail. If you apply for too many credit cards in a short amount of time, your credit score will remain low because this behavior is interpreted as a red flag on your credit report - a desperate need for money. Apply only for the cards you really need, ideally no more than 2 to 3. Since your credit score is a reflection of how well you handle credit over time, it won't increase quickly no matter what you do or don't do; it will only increase with time.

Use your new credit cards, though sparingly. Some people think that it is safest to have a credit card but not use it. Having a credit card without any movement on the account won't help you to improve your credit score. Particularly with secured cards, you need to let the bank see that you can manage the card responsibly. Use the card to pay for your small expenses which you know you can pay in full at the end of the month.

Pay off the full balance at the end of the month. This way you will avoid paying interest and fees. Since you have used your card very sparingly, this should be feasible. If you ever find yourself financially tight and you cannot pay the full balance, pay back as much as you can, and definitely more than the minimum payment required.

Make your payments on time. Be aware that it will take a few days before your payment gets posted so you need to send it in advance for it to get to your creditor on time. If you find yourself financially tight and unable to pay, call the creditors and let them know in advance, before they report you to the credit bureaus and damage your credit history.

Never charge more than 50% of the limit on your card. It is advisable to not use more than 50% of your credit card limit, even if you have a secured card. For instance, if you were approved for a credit card with a limit of $300, never use more than $150, even if you intend to pay back the balance in full. When you use your card to the limit, you give out the message that you need as much money as you can get. Be patient, as you prove that you are able to manage your card responsibly, your limit will increase over time.

Be aware of the terms of your credit cards. In order to apply this advice, you'll need to know the credit limits and interest rates of each of the credit cards in your wallet (the more reason to not have too many cards.). If you ever need to incur a large expense (like buying a ticket to your home country for an emergency visit), you will know which of your credit cards is best to use if you know which one has the lowest interest rate.

Remember: To avoid missing payments, keep a calendar where you have the dates when your bills should arrive. That way, even if you don't get the bill, you won't ever miss a payment.
About the Author
Andrea Stiles Pullas writes about ways to build and maintain good credit for immigrants to the United States for AccionUSA Your Money and You.
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