How to Manage Your Credit Wisely

Your consumer credit score is one of the most important numbers that will follow you throughout your life. Just like your Social Security number or your blood pressure, in time you will find that knowing your credit score will help you overall ability to attain the things you wish in life. Whether you want to buy a home or re-do your home theater system, chances are your credit score will determine exactly how accessible these things will be for you.

Credit scores are three-digit numbers that are often called FICO scores. Ranging from 300 to 850, your credit score is an overall assessment of your "credit worthiness," or your ability to repay your debts accordingly. The higher your score, the more likely banks feel you will be able to repay your loans or credit card balances. And the lower your score, the higher the risk you will appear to be to a bank or another lender. As a rule of thumb, you should try to get a score of 700 or higher - 750 or higher is preferable. If your score falls below 640, you run the risk of being considered "subprime," or such a great risk that you will be rendered ineligible for many loan programs.

Why your credit score matters

While you are searching for your best payday loans, you will find that your credit history will come into play. Credit scores, like it or not, directly affect the types of loans for which you're approved. In general, if you have excellent credit you will be granted preferable loans at lower interest rates. Those consumers with poor credit scores will find it much more difficult to be approved for loans or other financial tools.

Managing your credit

As you continue to build your credit profile by applying for credit cards, buying cars, taking out student loans and buying a home, be sure to keep these factors in mind. If you manage your credit the same way you manage the maintenance of your car or your address book, you will find that your overall credit health improves tremendously.

• Borrow within your means: Borrow only what you can afford. If you take on too much debt, it will soon catch up with you. As a result, your credit score could suffer.
• Pay your bills on time: One of the smartest things you can do is to pay your bills on time each month. If you demonstrate an ability to pay your bills by their due dates, it will show your creditors that you take your debts seriously. This is also one of the best ways to boost your credit score - 35 percent of your score is directly associated with your payment history.
• When in trouble, pick up the phone: If you get in trouble with your finances - say you lost a job or had an unexpected family emergency - don't hide from your creditors. Engage them. If you decide to ignore your bills and fail to pay them, you will lose bargaining power with your creditors. Instead, call customer service and ask to speak to a supervisor. Perhaps, if you have an excellent credit history, you can come to an arrangement that will keep your account in good standing. Don't be afraid to ask for help or patience; consumers who have excellent payment histories could be extended some assistance.