November 9, 2015 12:10 am
"Improving and maintaining a positive credit history is important for people of all backgrounds, ages and life phases," says Mike Sullivan, director of education for Take Charge America, a national nonprofit credit counseling and debt management agency. “A few credit missteps can set back your financial goals significantly, even years in some cases.”
To do just that, Sullivan recommends the following tips.
1. Limit the Number of Cards
People are bombarded with dazzling credit card offers, but applying for too many can negatively impact credit while also increasing the risk of deep debt.
2. Avoid Fees
Credit card companies charge fees for late payments—even when it’s just a day or two—and for exceeding card limits, even if it’s only a few dollars. Worse, exceeding limits or making late payments may trigger a higher interest rate and show up on your credit report.
3. Pay Off Balances Every Month
Many people fall into the trap of making just the minimum payment, but paying off balances ensures consumers aren’t wasting money on interest.
4. Never Get a Cash Advance
The prospect of quick cash is tempting, but advances almost always come with hefty fees and high interest.
5. Don’t Close Old Accounts…
While this may seem counterintuitive, closing a card may negatively impact your credit because it reduces credit-to-debt ratio and credit history, both major factors credit bureaus use to calculate scores.
6. …Unless There Is a Steep Annual Fee
In this case, the benefits of closing the account may outweigh the potential effect on credit.
7. Review Statements Each Month
It’s important to check your account statements monthly to ensure they are accurate and that you understand the terms.
8. Opt-Out of Prescreening
Minimize the temptation to open new cards by opting out of pre-screened offers at optoutprescreen.com.
9. Use the Perks
Credit cards offer perks beyond travel rewards and cash back, but many don’t know about them. Agreements spell out all of the benefits, from buyer protection and car rental discounts to extended warranties and free airport lounge access.
10. Use Cards Online
With identity theft on the rise, use credit when making purchases online. If your number is stolen, you will not be out any money while the card company investigates. With debit cards, the money may be inaccessible while the situation is being resolved.
Source: Take Charge America
Published with permission from RISMedia.