The Essential Guide to Credit Health

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Your wallet probably has a credit card in it, and that’s OK.

No, really. Good credit card habits can help you build credit, and we will all have to deal with credit at some point in our lives.

Here are 8 tips to build (and keep!) good credit with credit cards.

1. Stay within your limit. “Your credit score can be negatively affected if your run over your credit limit,” Painesville Credit Union CEO Lori Guzzi said.
2. But that doesn’t mean you should increase your spending limit, she said.
“Resist the temptation to simply call up your credit company and ask for more credit,” she said. “If your credit ratio is more than 30% of our FICO score, you’re looking at a ding on your credit going forward.”
3. If you’ve lost your job, suffered a medical emergency, divorce, loss of spouse, or have another hardship, get in front of your debt before it becomes a problem.
“The worst thing you can do is ignore your credit card bills,” Guzzi said. “One late payment can cause a domino effect on your credit score. Call your creditor and work out a payment arrangement or inquire about hardship programs that are available to you.”
4. More credit is not always best. Applying for too many cards can cause your credit score to drop.
“This is a problem especially if you are trying to build credit,” Guzzi said.
5. Pay attention to perks! Some credit card perks are worth it, others aren’t. Most credit card companies charge higher interest rates for perks, so if you don’t need the perks – get a different card!
6. Too much available credit can also be a problem for your credit score, Guzzi said.
“It’s important to vary your types of debt,” she said. “Fixed rate loans for homes or cars can help your credit score because it varies the kinds of debt (and credit) you carry.”
7. Once a credit account is open, it should stay open.
“We see sometimes when a member will work hard to pay off a bunch of debt and close out any credit cards with zero balances,” Guzzi said. “Check with your financial advisor before your close any credit accounts.”
8. Check your credit report!
“Your credit report is a great way to stay on top of your financial health,” Guzzi said. “You can also dispute errors on your report that are causing your credit score to drop.”

We’re always here to help you reach your financial goals! Call us at Painesville Credit Union at 440-352-8974 to set up a financial counseling session, open a savings account, or finance your dream car or house!

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