- Make payment on time
Payment history is key when it comes to establishing a good credit score, a recent late payment can cause as much as a 90-110-point drop on a FICO score or 780 or higher. To avoid drops it’s a good idea to set up auto pay on all your payments so you don’t miss a payment.
- Don’t bump against your credit limit
Payment history, credit utilization ratios -- essentially how much credit you have available to you versus how much you are using -- play a big role in shaping credit profiles. To keep scores from taking a dive, it's important to avoid bumping up against credit limits. Instead, try to only utilize 25% or less of all your available credit at any given time
- Always consider your credit score
It's important to consider what effect the move is going to have on your credit score. Of course, to do so, you'll need to know what your credit score is. Consumers should check their credit reports at least once a year. You can do this for free by visiting www.annualcreditreport.com.
- Understand terms and conditions
Terms and conditions vary from product to product, so it's important to read through every single loan or credit card contract before you go ahead and sign on the dotted line. You should be sure to check what interest rates are being offered and when they will be applied. You also want to thoroughly read through fee structures, so you have a good sense of the costs associated with each line of credit.
- Charge in accordance with your budget
A credit card can be a powerful payment method, since it allows you to earn points on purchases and may also get you access to exclusive perks and discounts. But special offers can easily be rendered moot if you don't control your spending and end up with a mountain of interest-incurring debt instead. To avoid winding up in dire financial straits