The Dos and Donts of Building Good Credit

If you have bad credit, don’t assume that you’re doomed to that fate forever. Bad credit is reversible, but it takes a lot of work to get your credit back into good standing. Fortunately, the steps you must take in getting there are relatively painless. If you follow a few general guidelines in what and what not to do to repair your credit, you will be well on your way to putting yourself in good standing.

First, work at the things that caused your bad credit status to begin with; catch up on bills and address negative items that show up on your credit report. Next, keep a few guidelines in mind to help you establish good credit habits

What NOT to Do

Small purchases will add up over time. Using your credit card to make small purchases can cause you to lose track of your spending. When making small purchases, always try to use debit cards or cash.

Though credit cards come with a set limit, this doesn’t necessarily mean that you should use your entire line of credit. Stick to purchases that you know you can afford. If possible, avoid making just the minimum payments, because doing so will cause your interest rates to increase.

When you are deep in debt, you might wind up regretting many of your credit card purchases, so use your credit card sensibly to avoid overwhelming debt. Before making any purchases, evaluate whether you will always be satisfied with that purchase.

What to Do

Use your credit card for your needs instead of your wants. When your credit is bad, you shouldn’t restrict yourself from using your credit cards entirely, but do prioritize so that you’re not spending needlessly. Using a credit card sensibly shows that you’re financially responsible.

If you can’t make a payment on time, discuss your situation with your creditor. By making prior arrangements, your creditor will see that you’re making an effort to keep your credit history clean. Sometimes, being straightforward with creditors can also result in waived late fees.

Keep your credit balance low. One guideline is to keep your balance at 30% of your credit limit, because high balances will decrease your credit score.

Although repairing your credit can seem like a daunting task to undertake, it only gets easier with time. When you adhere to these basic guidelines on how to establish good credit, you will find your credit to be in better standing.