Good Credit Practices

You’ve probably heard that what you do today will follow you into the future. The same is true when it comes to credit. The type of credit you build today could be the key to getting the car, apartment or even the job you want in the future. By understanding how to manage your credit, you can develop the type of credit that can help you get the things you need and maybe even some of the things you want.

Seven Tips for Maintaining Good Credit

  • Only spend what you can afford to pay back.
  • Pay your bills on time (give yourself at least eight to ten days for mail time).
  • Pay at least the minimum amount due each month. Doing so will help you avoid additional fees and maintain your credit rating.
  • To avoid additional fees, stay within your credit limit.
  • If you move (even for the summer), notify your creditors immediately, so they can send your monthly statements to your new address. If they can’t find you, you won’t receive your statements. Remember: Good credit is your responsibility. Contact your creditors whenever you move.
  • If you’re having trouble making your minimum payment, call your creditors to work out a solution.
  • For protection, remember to sign the back of your credit card.

Credit Terms to Know and Understand

  • Annual Fee: Some credit card providers charge a yearly fee for use of their card; others offer cards with no annual fee.
  • Annual Percentage Rate (APR): The APR is the yearly cost of interest charged to a credit card’s revolving balance.
  • Finance Charges: The total cost of credit, including interest, service fees, late fees, transaction fees and other charges.
  • Grace Period: A time period, usually 25 to 30 days, before interest begins to accumulate on a new purchase only when there is no balance being carried forward from any previous monthly statement.
  • Late Fee: To avoid late fees, credit card bills must be paid on time.
  • Minimum Payment: The lowest dollar amount due each month on an account’s outstanding balance. The lower your monthly payment, the longer it will take to pay off the balance, because interest will still accumulate on the unpaid balance.
  • When to pay: You should wait until you receive a credit card statement, or bill, before you send your payment. That’s because the portion of the statement you send back with your check helps ensure that your payment is credited to your account and not another account. Make sure you always write your account number on the check and allow for sufficient mailing time.

Some Things Are Best Kept to Yourself
Unfortunately, fraud is a booming business. Once someone knows your credit card number and expiration date, that knowledge is as good as cash. Fortunately, you can protect yourself from becoming a victim of credit card fraud by doing the following:

  • Save all your charge receipts and check them against your monthly statement.
  • If there’s a charge you don’t remember making, call the credit card issuer.
  • Think carefully before lending your credit card to anyone; if you let a family member or friend borrow it, you’re still responsible for paying all charges.
  • Memorize your PIN instead of carrying it in your wallet.
  • Merchants can ask for your signature only as terms for accepting your card. You are not required to give out additional personal information when you use your card for purchases. If your card is lost or stolen, call the credit card issuer immediately.

Adapted from Good Credit: Your Future Depends On It; 2004 Wachovia Corporation