Infographic provided by: Lendgreen
If your parents have been managing your credit all along, suddenly having to deal with credit balances, credit scores, and credit reports might prove to be a bit of a shocker. And then there are the payments to consider. Credit management takes a sharp turn toward the serious when you become an adult and it can all be quite overwhelming. Here are some tips on how you can manage your credit more effectively, and keep credit problems from getting the better of you. Read on.
Obtain a copy of your credit report
You will likely want to review your credit standing when you are planning to make a major purchase, but you should obtain a copy of your credit reportk at least once a year. This will clearly show how you stand with regard to your credit and how much you owe. Ideally, you will want to obtain credit reports from more than one credit reporting firm.
Find out your credit score
Based on your credit reports, you will be given a credit score or rating. This will reflect your viability to receive further credit. Higher scores generally indicate lower risk, but keep in mind that there a number of different ways by which credit scores are assessed and assigned. Your credit card company should be able to provide you a credit score along with your credit report.
Maintain consistency in identification
From the start, make sure you provide complete and accurate identification information. This establishes a proper credit history, with much less risk of your account being linked to a wrong report. Maintaining consistency with regard to your identification will also ensure the completeness of your file.
Draw up a budget and stick to it
Credit isn’t free money; it is the privilege to use money that you will later have to pay for, with interest. To make sure you don’t go overboard, set up a budget and stick to it. It can be tempting to use your credit to get a bunch of cool stuff or to do some fun things, but always keep the function and the rationale for credit in mind.
Use just enough credit to establish your viability
Not using your credit can be just as detrimental as overusing it. You should place at least a few purchases a month on credit in order to establish a history of activities using your credit cards. This will give creditors a good idea of how you can manage payments and your account in general.
Avoid missing payments
You should avoid missing payments as much as possible. Furthermore, when you do make your payments, make sure to hand them in on or before the required date. Consistently late payments are a red flag for creditors, as they often indicate frequent late payments in the future, and perhaps even an inability to pay.
Maintain a variety of credit types
Maintaining a number of different types will prove your ability to handle most credit card scenarios. This can help improve your financial ‘image’ with both existing and potential creditors.