We all know about the many benefits credit cards offer.  But they also come with rules, which may be even more important to know. This overview can help you save time, money, and your credit rating.

The pleasures of plastic

Everybody loves the convenience and financial flexibility credit cards give us, but did you realize that when you use them, you’re not just charging – you’re getting scored. The way you handle credit cards (and all debt) is of extreme interest to lenders, employers, insurers, and even landlords. That’s why you’re careful to pay your bills on time every time, don’t max out on cards, and keep your debt at a level you can handle. You deserve credit for your good credit habits! This section examines some additional ways you can create, build and maintain a good credit history.

About credit reports

Basically, a credit report contains detailed information on an individual’s borrowing or credit history. It can provide lenders with a snapshot of your financial health, including activity on credit accounts, loans, late payments, and whether you’ve been arrested, sued, or declared bankruptcy.


What is in your credit report can impact the interest rate you receive on loans, whether you are approved for credit cards, if a landlord accepts you as a tenant, even whether you’re offered that job you interviewed for. Of course it’s your responsibility to build a good credit history. But it’s also your responsibility to make sure your credit report is accurate and up to date. Follow these steps and your credit report will always be a credit to you.


  • Check your report - The Consumer Financial Protection Bureau advises consumers to check their credit reports at least once a year. Not only does this help you verify that all of your information is accurate, but it also helps guard against identity theft.  (To order a copy of your credit report, see below)
  • Fix mistakes -  Common errors include loans and credit accounts you never opened, incorrect personal information, and account activity listed as late.
  • Freeze the thieves - thieves from opening credit accounts in your name by putting a freeze on your credit reports. A freeze prevents prospective creditors from accessing your credit file unless you lift the freeze for that creditor or for a specified period of time. Freezes are generally free for ID theft victims.

Establishing credit

Look around at the mall, restaurants, supermarkets, even gas stations and you’ll assume everybody uses credit cards. But the fact is, about 29% of Americans have no credit cards at all, according to a recent Gallup poll. And more than 45-million American adults – that’s 1 in 10 – have no credit history (source: CNBC).


Establishing credit can be difficult at first. How do you get approved for a credit card if you don’t have a credit history? Sounds counterintuitive, but a good start is to get a copy of your credit report, to ensure there are no problems and that your name is in the clear. Has someone tried to apply for credit using your name? And if they have – did they rack up debt under your name? Nobody is immune from identity thieves. In fact, a popular target for them is babies, because it will be years before they think to check their credit report. Meanwhile, the thieves can wreak havoc using their social security numbers.  So Step One, make sure you are not a victim.


There are three credit reporting agencies: Experian (888-397-3742), Equifax (800-685-1111) and TransUnion (800-888-4213). And you’re allowed to get a free report from each of them every 12 months. You can also get a free copy of all three credit reports from the government HERE  or at the government-authorized site HERE

Store and secured cards

Once you’ve determined that your credit history is accurate, how to you improve your creditworthiness? One of the easiest ways to build a strong credit rating is with a retail store card. Look for one with the lowest interest rates. Your plan of action should be to make small charges using the card, then pay them off in full each month on or before the due date. After six months or so your good credit rating will be established.


Another good way to establish credit is with a secured card. You deposit money into a savings account, and the bank issues you a card, using your account balance as collateral. As the balance goes down, so does your credit line – so be careful not to become overdrawn. That could result in penalties and a black eye for your credit rating. And try to get your secured card from a bank or credit union that pays you interest on your deposits.


For more information on ways to build credit, visit HERE

Pre-approved offers

Beware the too-good-to-be-true credit card notices that come in the mail. These offers could result in higher rates after the initial period. More important, do not be tempted to take on too many credit cards. That can actually hurt your credit rating, because it raises your potential to accrue higher debt.


Instead of throwing those offers in the garbage, be sure to shred them all, so they can’t be used by ID thieves sifting through trash (yes, they really do that – it’s called ‘dumpster diving.’)

Good habit checklist

One of the best things about credit cards is that they’re so convenient. In fact, it’s so easy to buy things on credit that you could quickly end up owing more money than you bargained for.


Here are some of the things you can do to ensure you use credit cards wisely and build a solid credit score:

  • Buy what you can pay for - you are borrowing money from yourself each time you charge. Be certain you can afford each purchase so you don’t build excess debt
  • Get rid of old cards - Despite their zero balance, even the cards you don’t use pose a potential debt-accruing problem
  • Don’t max out - experts suggest using about 30% of your total credit limit
  • Pay balances in full - it shows you’re financially capable of handling debt
  • Stay on time - consider auto-payments or set up electronic reminders.  Besides hurting your credit report those late fees can add up

Credit trouble signs

We probably all know the right way to handle credit debt. But sometimes there’s a big difference between “I should” and “I can.” Virtually everyone can go through financial tough times.  The trick is to recognize warning signs that could be turning your ‘rough patch’ into real credit problems.


Are you heading for credit trouble? Here are some warning signs:

  • You’re not able to pay bills on time and are being charged late fees
  • You cannot pay all your bills each month
  • You’re charging everyday purchases that you’d ordinarily buy with cash
  • You’re borrowing money to pay existing bills
  • More than 20% of your net monthly income goes to loan and credit card payments
  • You’re maxed out on credit card limits
  • You can only manage to pay the minimum payment on credit cards

Free help for credit problems

Are you in financial hot water? Don’t panic, there are many life preservers within reach. First, help yourself, by determining exactly what your financial situation is. How much money comes in and how much goes out? Keep a list of expenses, both fixed (mortgage or rent, insurance, car payments and insurance costs) and variable (food, entertainment, and extras). Once you can identify where your money goes, you can prioritize and create a budget.  You can find lots of help and sample budget templates online.


If you continue to struggle with debt, consider these free resources, suggested in a recent article in USA Today:

  • Credit counselors - services include reviewing credit reports and budgets, housing and mortgage counseling, financial education and debt repayment strategies. The National Foundation for Credit Counseling (800-388-2227), has nearly 600 member offices offering free or low-cost guidance and advice.
  • Websites - There’s a ton of online info, but beware – not all of it is accurate or free. Here are some reputable sources:
  • The Consumer Financial Protection Bureau: Visit Site Here
  • Care Connect USA: Visit Site Here
  • Other government services, including: Visit
  • Attorneys - A consumer bankruptcy lawyer may be a logical next step if you’re being sued by creditors, or if you can’t solve your debt issues. Many attorneys offer free consultations; others may charge a very low fee. The National Association of Consumer Bankruptcy Attorneys has a loator feature on their website.