Building a great credit history

All of us try for a good credit history which is extremely vital when we need to go in for important purchases such as renting an apartment or buying a home. Most of us learn the hard way about building a good credit history and it is only through trial and error method that we learn from our mistakes. However, trial and error method is not the right methodology as errors in your decision may hamper your credit in a very negative manner. You might find out about some great lessons to learn regarding expenses but bad credit is a very high price to pay for such experiments. You can create a good credit history for yourself if you pay good attention to your expenditures. Bad credit represents our poor state of financial affairs and poses as a major obstacle when we want to purchase a home or go for higher studies. Certain companies have become very particular about credit history and are checking the same while employing people. In order to make sure that you project a good credit history, it is necessary that you start by using your credit as wisely as possible. Handling your credit responsibly will enable you to project a good credit history. The below steps have been put together to enable each of us in using our credit in a proper sense.

1) Make sure your purchases match with your spending capacity - When you understand your purchasing power, it makes it easy for lenders and creditors to comprehend that you are a responsible borrower. If you can show your creditors that you know how to borrow and also to pay it back properly, then it shows that you know how to handle credit. Charging only what you can really afford will certainly aid in reducing excessive debt.

2) Utilize only a small amount of the credit which you have - Using the entire limit on your credit cards clearly shows that you are irresponsible with using the credit. Hence, it would be great if you managed your credit limit by using only a small part of it.

3) Initiate with a single credit card - It would be good if you
started with only a single credit card at a time. Accumulating a number of credit cards right off the bat is not a good approach. It would be a good idea to be responsible with your available credit. It would be best to keep your credit limit below 50% and below 30% will be very much ideal.

4) Paying your balance in full and on or before the due date - You need to make sure that you pay off your balance every month and you need to be timely in your payments which will make the creditors and lenders understand that you are very much responsible towards making your credit payments.

5) Carry the right credit card balance - It would be nice to pay more than the minimum payment and you need to get rid of your credit balance as soon as possible.