Pointers and Tips to Understanding and Managing Your Credit

How you manage your credit can affect every aspect of your life. More landlords are doing credit checks before renting. Insurance premiums are cheaper the better your credit score is. Even employers are checking the credit of potential employees.

Here are some no nonsense and easy tips from a former credit counselor to help you maintain a healthy credit report.

When making a major purchase, such as a car, find the item you want agree on the price and then fill out the credit application. Don't assume that you can receive a better deal if you show that you can obtain the financing and start filling out loan applications at every place you go. Negotiate first and when you find the deal that is to your satisfaction fill out loan paper work then. Each time your credit bureau report is pulled (this is called a hit) your score goes down by as little as 5 to as much as 20 points. Another option is to get your own financing through your bank or credit union and then go shopping.

Don't fill out any store credit card applications unless it is for a department store charge card that you really need. No matter how much you receive off of that day's purchases. Having too many open accounts is also a negative on your credit report. Don't think you can open and close the account the same day, once the account has been open and a credit report pulled the damage has been done. Department store charge cards also usually carry a higher interest rate and require a higher monthly payment.

Realize you can set your credit limit with some cards. The more you show your credit worthiness the higher credit limit you will receive. Sometimes it just takes a call to customer service to stop any credit limit increases. Request not to be reviewed for any annual or semi annual increases.

When you get in to a tight spot financially know which of your bills you need to pay on time to avoid a negative credit reporting. Of course it is important to pay all your bills on time but there are times when you get into a financial bind and aren't able to do that. After the basics of food, shelter, and clothing are met sit down and review your situation. Any credit cards, bank loans, and student loans will more than likely report each month to the credit bureaus. For your other obligations never underestimate the power of a phone call. Most companies will work with you provided they know what your situation is. Set a definite payment plan and then call. They don't want to lose your business any more than you want to lose the service they provide.

Not only are late or missed payments reflected negatively on a credit report but going over the credit limit is also reported. In addition to the fees most companies charge your account will also be reported as OTC (over the credit limit).

Read the disclosure that comes with your credit card. A credit card is a contract. The details of the contract are outlined in the disclosure statement. Some credit card companies have a clause that payment in full is due for missing as little as one payment. A missed payment can also significantly increase your interest rate.

Know the difference between an authorized user and a joint cardholder. A joint cardholder has agreed to be responsible for the debt placed on the credit card. An authorized user agrees to charge on the card without being responsible for the debt. It is also important to note that companies can report negatively or positively on an authorized users credit bureau report. Know and trust any one that you allow to impact your credit whether it is a joint cardholder or authorized user. Your credit is not going to be as important to another person as it is to you.

By carefully watching and understanding your credit you prepare for a life of healthy financial rewards.