The key to managing credit is acting responsibly.
Show how responsible you are by following this advice:
stability. If you have a bank account, a stable job, a regular income
and the same address for many years, then creditors see you as stable.
Creditors consider homeowners more stable than renters.
your bills on time. Get in the habit of paying bills before the
due date. Call your creditors if you have a financial crisis. Ask
for an extension. Even if you just forgot to make a payment, send
it in as soon as you remember. Most creditors don't report late
payments until after 30 days.
some credit, but not too much. If you have more than five credit
cards, you appear overextended. Don't "max out" all your
credit cards. Pay off or don't use a card or two if you're getting
close to the limit.
apply for the credit you need. Every credit inquiry is recorded
on your credit report. Several inquiries may be a red flag to creditors.
your debt-to-income ratio at 20%. Creditors look for evidence that
your monthly payments on non-mortgage debts take no more than 20%
of your net monthly income. This is called your debt-to-income ratio.
what's in your credit report. It's your responsibility to correct
any problems or errors. For instance, if you have a rather common
last name, you might find that someone else's credit information
appears on your credit report by mistake.
Make sure your social security number appears on the credit report
To figure out your debt-to-income ratio, divide
your net monthly income by 5. For example:
If your gross monthly pay is $5,000, you should
spend no more than $1,000 on debt payments, other than housing.
5,000 ÷ 5 = 1,000