Dan Asks… I just received my first credit card… What are a few ways in which I can manage it wisely?

It is incredibly important with your first credit card that you work on building a credit score. This will allow you to do a number of important things down the road such as being approved on a mortgage application, being able to obtain a personal loan or renting an apartment.  

In order to build your credit score,  Avoid the 5 following credit card BAD habits:

  1. Max out your credit card. Just because you have a credit limit of $500, $1,000 or $2,000 doesn’t mean you should reach that limit each month. Lenders will consider your debt-to-credit ratio and if you’re always at your limit you will be considered as a risk. As a good rule of thumb, you should only use between 10% – 30% of the limit on your card. Once you’ve become comfortable with your finances and paying off your credit card each month, then you can consider charging more and eventually requesting a higher limit.
  2. 2.    Co-sign on a loan. As you co-sign on a loan for your friend or partner, you are automatically assuming responsibility for the loan if they are unable to pay it off. Even if it seems like the right thing to do at the time, think twice about taking on this responsibility and avoid the risk of being stuck with unnecessary debt
  3. 3.    Open multiple credit cards. It’s more than likely that every time you pay at a department store or walk into a sporting event that you may be offered a new card. They often times offer what seem to be great perks but think twice before you sign up for that next card. A wide variety of cards makes it easy to increase debt and hard to pay it off.
  4. 4.    Miss payments. If worse comes to worse, always make sure you are at least making the minimum payment on your credit card. This may seem difficult at times as bills stack up but missing payment dates will quickly ruin your credit score leaving you in a great deal of trouble. Stick to one or two cards – its more manageable.
  5. 5.    Disregard other bills. Lenders take into account your payment habits on all of your bills, not just your credit card. By making late payments on your bills you will without a doubt be hurting your credit score. Set up a bill pay or automatic payments to keep you on track!
Meet Cheryl!

About Cheryl

As a successful business owner and community leader, Cheryl Braunschweiger is known and respected for getting things done with a degree of skill and enthusiasm that bring out the best in those around her - colleagues, clients and friends. The name of her business, ALMC Mortgage, reflects Cheryl's philosophy and personality. She says it stands for All Loans Must Close –a reflection of her determination to do whatever it takes to serve her clients. Cheryl has been in the mortgage lending business for 20 years. Read More About Cheryl
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