Why does credit get a bad rap? It’s usually because most of us associate it with financial mistakes from our past.
Credit isn’t all bad, though, since it can help you buy things you need and pay them off over time instead of having to wait. Combine that benefit with a lower interest rate, and credit can be looked at as a friendly loan that can help and not hurt you.
On the other hand, if you let credit card spending spiral out of control and have to pay a high interest rate, it can do more damage than good. To prevent this from being your reality, let’s look at some credit-related moves you should consider doing now.
1. Get your free credit report.
You can’t move towards the future while completely ignoring the past, at least not where credit is concerned.
You need to know your past so you don’t repeat it, and getting your free annual credit report can help you do just that.
Use your free credit report to see your weaknesses. Let it remind you of past credit mistakes you don’t want to repeat.
Also, use it to make sure there are no errors that could hinder your credit score. If there are, you’ll want to contact the companies in question so they can fix the mistakes and raise your score.
2. Do an audit of your credit card spending.
Have a look at your credit card statements to see what you’re swiping for. If you see a ton of unnecessary expenses on luxuries like clothes, restaurants, and entertainment, vow to change this spending.
Implementing a rule such as reserving credit cards for emergencies can help. Or you can use them just for necessities like groceries and gas.
For other spending, tell yourself that cash is the only way. This can keep your credit card in your pocket, so you don’t rack up loads of debt you don’t need.
3. Increase your credit limit.
Make this move only if you know you can control your spending. Otherwise, it’s best to leave it alone.
How can increasing your credit limit be a sound financial move? Because it can improve your credit utilization ratio, which can boost your credit score.
You can request a credit limit increase by calling your card company or logging into your account.
4. Put your credit card payments on autopilot.
The hustle and bustle of everyday life can make it easy to forget to make a payment on time. Reporting bureaus won’t forget, however, and this could negatively impact your credit score.
To prevent missed payments, use autopay. If you can, try to pay the entire balance every month too to reduce what you pay in interest.
5. Pay more every month.
If you can’t set autopay to pay the entire balance of your credit card every month, do the best you can. Even paying a few more dollars every month can help you reduce the outstanding debt and the interest owed on it.
Section 8 Assist
