by Jared Falk

Created on: June 06, 2009

Credit has become an integral part of society in America. Just about everyone uses credit in one way or another. But how much do we know about credit? Are we all aware of the dangers and the rewards credit has to offer? Do you know how credit can change your lifestyle? Here we will talk about things Citizenship Economics forgot to cover in high school.

Everyone should know how important credit scores are. Your credit score affects your borrowing power, insurance rates, whether or not you get hired for a job, or even whether or not you are approved to live in a rental. The way you handle money is now used as a tool to judge your integrity. People with bad credit are seen as more irresponsible and can be turned away from jobs. Statistics also show that people with bad credit get in more automobile accidents than those with good credit, and insurance companies are allowed to use that. Caring about your credit score is now just another thing in life we can stress out about because of the harm it is capable of having a bad one.

To maintain a good score, here are a few tips:

Pay at least your minimum amount due on time every month. This seems like an obvious thing to say, but even paying as much as 30% interest is better than ruining your credit.

Always have an outstanding balance. Try to get a low interest rate on a card and keep money outstanding at all times using the card and paying into it every month. This just keeps the wheels turning on your credit that you can spend and are good for it every pay period.

Watch out for credit checks. The more often your credit is checked, for any reason, the worse it is for your credit score. That department store credit card that saves you 10% on your first purchasehurts your credit. Don't sign waivers allowing credit checks for small issues. Use credit checks sparingly.

Resolve issues. If you lose a bill and then get a threatening call from the creditor, be nice. Talk out the situation with the person and calmly explain, apologetically, why the bill is late. That person has the power to report you to the credit recording companies, so you need to stay on their good side. Why apologetically? Honestly, it is their money you have so you must understand where they are coming from.

There is another tip I have found which is quite nice. If you are in a situation where you know you can afford all of your staples (gas, groceries, phone, power, etc) every month, put it all on a rewards credit card. I personally enjoy the cash back, but air miles or points are okay as well. You simply train yourself to put everything on the card and pay it off in full every month. A middle income person who spends around $12,000 per year in just staples will pay no interest on that card, can obtain up to $600 as a bonus, and create a solid credit record. Try it out and be amazed.

Lastly, watch out. Credit is very dangerous. Credit can tempt you to spend money you can't easily pay off. If you are cautious, though, it can be a very useful tool.

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