Build Your Credit Responsibly
Effects of building a good credit history
Building a good credit history can help you through many sound investments, such as buying a home, financing your education and landing a job; therefore, starting with your first credit card, start nurturing your credit line, responsibly and smartly, otherwise, you end up in a pile of debt and bad credit.
Avoiding excessive debt and leaving good credit impression to creditors when you easily pay back what you borrowed or placed on charge are two effects of knowing how to put a limit to your borrowing, such that you only charge or borrow what you can afford. When you apply for a loan, the way you handle your credit card obligations also applies in loaning, such that only take out as much loan on what you can afford to repay, despite what the lender will inform you on how much you are qualified to loan, and seeing to it that you have carefully reviewed your budget for your monthly loan payment, making sure that the payment doesn’t’ exceed the amount your computed.
Lenders know that borrowers who maximize their credit limit are those who have difficulty in repaying what they borrowed, therefore, use a small amount of your available credit limit so you can easily pay the whole balance within the month, either you stay below 50 % or 30% of your credit limit, which is a responsible and smart way to build your credit standing. If possible, limit yourself to just one credit card, especially for first-time credit card users, because the more credit you have, the more you will end up using as many charged expediture and it will be hard to keep up with your monthly balance and payments and this will eventually result into a negative credit standing with your creditors.
Always be on time to pay your monthly credit bill payments to build a good credit score, because any delinquent payment may wind up on your credit report and the account will be sent to a collection agency, which results into a negative account off your credit report, such that more delinquent payments can be like a debt collection that will be hard to overcome. A good credit score report should show the appropriateness of your payments that is paying your balances on time, which improves your credit, therefore, it is important to charge only what you can afford to pay so you won’t have a problem paying your balance every month and doing this is letting the creditors know that you are capable of paying your bills.
The right measure in paying your credit card balance
Use the right approach in paying your credit card balance by the following: make it a point to pay more than the required minimum amount in your credit card each month so you are able to pay the balance as fast as possible, avoid making late credit card payments, and continue to keep the balance at a reasonable amount.