Tips for Using Credit Wisely

Improving and maintaining credit scores and reports

Developing a healthy credit history can help you get the lowest rate possible on credit cards and other loans. Here are some tips that can help you use credit wisely:

1. Avoid charging to the limit. Some financial experts suggest staying within 35% of your credit limit.
2. Pay more than the minimum. If you can, pay your balance in full each month. Otherwise, pay more than the minimum whenever possible. New credit card statements spell out how much you will end up paying in interest if you pay only the minimum. It can add up!
3. Avoid late fees. Paying your bill on time will save you money, plus help keep negative information off your credit report. Consider automatic payments for an extra level of convenience.
4. Limit the number of cards. It's not unusual for some people to have 10 or more credit cards, but that can get you into trouble. Choose one card that has a competitive rate and the features you want. Consider an extra card if you travel often so you have a back-up.
5. Check your credit report. By law, you are entitled to a free credit report each year from annualcreditreport.com. Check it carefully for errors or fraudulent entries and report them immediately.
6. Know your rights. New credit card rules put into effect in 2010 require that your card issuer be upfront about fees and rate increases. They must deliver or mail your bill at least 21 days before the payment is due. There are limits on penalty fees as well. To learn more, visit the Federal Reserve at federalreserve.gov and click on "Consumer Information" and then "Credit Cards."