Keeping Your First Credit in Good Standing

Credit is a very tempting risk. As soon as you have all that available money at your disposal, all kinds of impulses can take hold of you. Stories abound of people getting numerous credit cards and going on spending sprees. Do you really think about keeping your first credit in good standing?

The Credit Hangover

Only after the bills come to their mailboxes do they feel the hangover. If it’s bad enough, they can feel it for many, many years. If you are one of them, you can be denied credit in the future, and you can even lose employment opportunities. You can be denied other loans, such as car and home loans. Such are the costs of abusing credit. With this in mind, here are some simple tips for wise use of that little plastic card:

Simple Tips

Never think of credit as free money. Credit is not free money. You have to pay it back, often with interest.
Understand what your credit history is made of. Your credit history is made up of several factors. It is 35% payment history, 30% amount owed, 15% length of your credit history, 10% new credit, and 10% type of credit used. As you can see, payment history factors in the most. A detailed explanation of each of these factors can be found at Experian.com.
Be patient. Building good credit takes years. It is a lifestyle made up of responsible money habits. Give it time.
Use your card regularly. Using your credit card regularly helps build up your credit history.
Pay your balance fully each month. As you use your card regularly, it is wise to charge small amounts and pay them off each month. That way, you build up a payment history, and you also avoid interest charges.
Pay your bills on time. The largest component of your credit score is payment history.
Don’t use too much credit. Avoid this temptation. If you can use cash instead, do that.
Don’t use it frivolously. Again, charge only small amounts.
Use it for things you already have money for. This will help ensure that you pay your balance in full each month. But more importantly, it is an easy way to help you build a credit record.

Looking at Credit Differently

To quote the great comedian Bob Hope, “A bank is a place that will lend you money if you can prove that you don’t need it.” This paradox is resolved when you see it from the bank’s point of view. It loans you money out of its vault so that it can earn money in return. It’s a business. Those who do not need credit are therefore the most likely to be able to pay the bank back.

Other Resources

Mid Oregon has resources to help you manage your credit. Here are a few:
Mid Oregon’s online banking tool, Credit Savvy .
Mid Oregon’s recent “Managing Your Credit” webinar. Watch the video. View the presentation slides.
Read Mid Oregon’s Blog articles about credit .
Mid Oregon branch locations to talk to a loan officer about your credit.
Order your credit report, free