Whether you’ve had a credit history for four years or 40 years, there are some credit tips you should never ignore – most of them referring to credit cards.
A credit card is a powerful piece of plastic, if you use it wisely. Even if you are very careful, there are still mistakes that can be made.
Here are five credit tips you should never ignore:
1. Review your monthly statement for mistakes or fraudulent charges.
Even if you are not a frequent card user, there are still many opportunities for fraud or mistakes to appear your bill.
By carefully looking over your statement each month, you can avoid errors that could result in serious damage to your credit.
2. Make your payments on time, every time.
Many card issuers will work with you if you notify them of a problem and make arrangements to pay after the due date.
However, if you do not contact your card company to notify them of a late payment, they can and will report your transgression to the credit bureaus.
3. Go paperless.
Even in this age of computerized statements, online bill paying and instant money transfers, some people still elect to receive paper billing statements.
According to the Consumer Financial Protection Bureau, stolen credit card statements are still the primary source of credit card fraud in this country.
If you really want a printed record of your credit card transactions, have them delivered electronically and print them out on a home printer.
“There’s no faster way to damage credit
than being late in paying a bill.”
4. Understand how credit cards affect your credit score.
Many people who have held credit cards for years still do not understand that cancelling a credit card can negatively impact their credit score.
A key piece of your FICO credit score is your debt-to-credit ratio. If you cancel a card that has a zero balance but a high credit limit, you could bring your ratio down sufficiently, which will impact your credit score measurably.
Anyone can find themselves in a tight financial position, but that is when we need to be the most diligent.
5. Never use a credit card to make a payment on another card.
If you find yourself doing this, you are already in deep trouble.
The debt spiral that is created when you start financing the payments for money you have already borrowed is a death spiral. You are essentially paying interest on the interest you have already accrued.
Stop immediately and make other arrangements.
For more advice, tips and information on credit and personal finance, check back here soon. Here is to your good financial health!
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