Credit and Credit Score

Using Credit To Build Credit Scores

Many experts agree that restoring credit scores often depends on how wisely you use credit after a financial bump in the road. Obtaining credit when one has damaged credit is not as difficult as one might think. There are many unsecured and secured credit card offers that are designed specifically to help you restore your FICO score to excellent levels. If you have damaged credit, I strongly urge you to investigate offers of credit that are specifically designed to build credit scores. But, be forewarned, you must use the cards wisely or they will have the opposite effect, one other than intended.

What follows are some important tips for using credit cards wisely. The advice below is aimed at those working to rebuild credit but it is good advice for anyone.

• Try not to carry a balance on the card. Pay what you owe promptly and pay all of what you owe if you can. If you must carry a balance, pay more than the required minimum payment. This will help you avoid high interest charges and, over the long haul, will save you hundreds and perhaps thousands of dollars.
• Do not use your credit cards without keeping accurate records of your spending. Keep your receipts, write down your card use as you use the card in a place certain (I use my date book for this purpose). You should always know what you have charged and when any given transaction took place. Aside from helping to control spending this simple technique will help you avoid identity theft.
• Never use your credit card for consumable items. Don't buy groceries, gas, medicine, and so on. If you don't want to carry cash, use your debit card for these purchases. My rule of thumb is if the purchase has no lasting value to me or to my family I pay in cash or with a cash equivalent (debit cards or checks). Of course, don't forget to keep track of these transactions as well.
• Do not be afraid to switch cards in order to reduce your interest rate, avoid annual fees, or two-cycle billing. While you are in the process of rebuilding credit this will not be a serious option, however, once your FICO score increases to something over 650 the possibilities of obtaining new credit may prove to be advantageous to you.
• There is probably no good reason to carry more than two credit cards for personal use. If you have more than two keep the two with the lowest interest rate and cancel all others. If you need more than two cards you are probably not managing your credit purchases well.

credit card abuse begins with not having a clear picture of how much you are spending and how you are using credit. Following these few simple tips will help you gain control of your credit card spending, help increase your credit score and help you to build a bridge to your secure financial future.