Establish Your Credit

Have you been denied credit approval because you lack credit history? Building and maintaining credit are the first two steps to developing a strong credit history. One way to establish your credit is to apply for one or two department store or gas station accounts. Use these cards for purchases, but do not exceed your limit. Also, be sure to pay the bill on time each month. Pay more than the minimum balance when your budget allows. Good credit comes in handy when you want to make big purchases, rent an apartment or even land a good job.

Maintain Your Credit

Now that you have credit, what are you going to do with it? Once you establish a line of credit like a home loan, car note or credit card, it’s important to manage it properly. The key to maintaining credit is being responsible:

— Always keep track of what you owe
— Don’t exceed your credit limit
— Always pay what you owe on time
— Pay more than the minimum balance
— Notify your lenders if you fall behind on payments (most are willing to work with you if made aware of your situation)

Manage Your Credit

Are you considering closing a credit account? Before you close an account, know your credit utilization ratio; how much credit you have available vs. how much you are using. A zero balance on an open credit card can help raise your credit score. Closing the account increases your credit utilization ratio and may lower your credit score. Negotiate a lower interest rate first with your lender first. Accounts with high interest rates or high annual fees are likely to result in more debt. Understanding how credit works allows you to make informed decisions to manage your credit.  

Rebuild Your Credit  

Is your credit history standing in the way of your dreams? Poor credit can have a lasting impact on your financial standing. The first step to improve your credit is to create more predictability in your expenses. Pay your bills consistently on time. Set up recurring payments online whenever possible. Sign up for utility payment plans or purchase a prepaid phone to avoid overage charges on your cellphone bill. Anticipate funds from additional paychecks, bonuses or other revenue streams. Allocate these funds to eliminate your debts and rebuild your credit.

Visit My Financial Guide at www.myfinancialguide.com for more tips, tools and resources on managing your budget.

This article has been prepared for informational purposes only. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each individual’s financial situation is unique, you need to review your financial objectives to determine which approaches might work best for you.

© 2013 Wells Fargo Bank, N.A. All rights reserved.

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