Establishing and Properly Maintaining Credit


By Deidre Davis

Throughout the year, many of us may find ourselves hesitant to check our finances — especially our credit card statements. From overspending on gifts to charging travel expenses, there are a number of common spending practices that could have a negative impact on our accounts this year.

Whether you find yourself in an overspending situation, you’ve been struggling to improve your credit, or you hope to maintain your current credit, here are a few steps you can take to keep your finances on track.

Get the facts

One of the best things you can do for yourself when it comes to establishing, re-establishing or maintaining your credit is to educate yourself. Your credit score is determined by several factors including the length of time you’ve had credit established, the type of credit you have (i.e., credit cards, auto loans), how often you obtain new credit, your payment history, and the amount of debt that you have. Being aware of these factors will help you know where your credit stands and ways that you can improve and maintain a good score.

A great way to be aware of these factors and how they’ve impacted you is to obtain a free copy of your credit report from There, you can access your report from any of the three major credit bureaus – Experian, TransUnion and Equifax – once each year. That results in three reports every year at no cost and no damage to your credit. You may also obtain your actual credit score – typically your FICO® credit score – but you may have to pay for this service.

Keep track of your credit

Once you know your credit status, take a closer look at each individual line of credit or loan to see where you can improve your score. Try making a list of each one and include the interest rate, spending limit if a credit card, remaining balance, and payment due date. Having this information in one place will help you avoid engaging in behaviors that can hurt your score, such as making late payments, maxing out your credit cards, opening multiple accounts in a short period of time and closing accounts with a long-time history.

Make a plan

In addition to preventing the things that will negatively affect your credit score, you also have the power to improve your score. By making payments on time, bringing delinquent loans current, and paying down or paying off credit cards (but not closing them), you will see improvements to your score over time.

Try making a plan that keeps you responsible with your credit. A great example is to decide how you plan to pay off credit card purchases. Will you pay them off in increments each week, each paycheck, each month? Or will you pay the full account balance shortly after making a purchase? When making these decisions, keep your interest rates in mind and determine which will be most convenient for you while also reducing the total interest you’ll pay over the course of the loan. That will save you money, keep your debt low, and improve your score over time.

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