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How to Manage your Credit Cards Responsibly

How to Manage your Credit Cards Responsibly-(1)

When getting a credit card for the first time, it can be tempting to hurry up and spend your money. However, it’s important to remember that while credit can help you make purchases that you might not otherwise be able to pay for with cash (like a house or car), it doesn’t mean that “free” money is.


How you use credit can affect your financial life and even your ability to obtain other credit. The key to making credit work for you is good management. Here are 10 tips for responsible credit management:


Live within your capacityThis is the number one rule for successful personal financial and credit management. Make sure you can afford what you are buying, even if you are buying on credit. You want to be able to pay your loan repayments, and before you buy something with a credit card, save up so you can pay off the balance.


Track Your Spending – Keep track of where you are spending your money. That way, you are less likely to overdraw your account. It’s also a good idea to keep track of your credit card expenses to avoid going over your limit.


Have a plan – You must have a plan for your money. You can even have a good plan for your credit cards. Keeping your money in the budget can help you pay off your loans faster, avoid credit card balances, and prevent you from getting into debt.


Make payments on time – The most important factor in your creditworthiness is your payment history. If you do not make payments or are often late with payments, this will be reflected in your score. This can mean additional fees, a lower credit score, and higher interest rates when applying for a loan.


Keep your debt low– While you may need to borrow for some things, like a house, car, or school, it’s important that you borrow only what you need. Try to borrow as little as possible. Your total debt payments should not exceed 36% of your monthly income to get better credit.


Don’t close old accounts – Sometimes it’s tempting to close an old credit account. However, the length of your credit history is important. Long credit history can improve your credit score and help you appear more responsible. Part of good credit management is making sure your score improves.


Have different types of credit accounts – One of the factors that lenders consider when it comes to your credit is the different types of accounts you have had in the past. A combination of revolving accounts and installment accounts is preferable. Installment accounts are those, like mortgages and auto loans, that show you can make a fixed payment over time (and get it on time). Revolving accounts, like credit cards, show that you can pay off your debts regularly without exceeding your limit.


Avoid Certain Loans – While different loan accounts are desirable, some loans appear suspicious and negative when viewed by lenders. These loans include salary, loans, and car title loans. Avoid these loans whenever possible.


Monitor your bank accounts – you can Monitor your bank accounts and credit card accounts. Regularly coordinate your returns to make sure your records match. You can also check your accounts online to detect fraudulent charges more quickly.


Review your credit report regularly and correct any mistakes – To effectively manage your credit history, you need to keep track of your credit report. You are entitled to a free copy of your credit report if you write under certain conditions. Make sure there are no fraudulent accounts and errors are corrected. Inaccuracies can lead to credit losses.



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