The Pope recently issued 10 commandments of driving, so we thought, “If the Pope can talk about driving from the back of his little popemobile, we can talk about credit.” So without further ado, Consumerist’s 10 Commandments of Credit. It’s not everything you need to know about using credit wisely, but it’s a good start.
The 10 Commandments Of Credit
1) Thou Shalt Pay Off Your Balance In Full Every Month.
Keeping a balance on a credit card is a sin in the eyes of the Consumerist. If you have a balance, make it your priority to pay it off as quickly as possible.
2) Thou Shalt Get A Credit Card With Extended Warranty Protection, Cash Back or Reward Points, And Thou Shalt Take Advantage Of Them.
Credit cards can be very useful tools for consumers. Extended Warranty Protection can double a manufacturer’s warranty and costs you nothing. Cash back, obviously, saves you cash. Reward points are useful for lots of things. Take advantage of these tools! They’re there for smart people like you.
3) Thou Shalt Check Your Credit Report.
Go to annualcreditreport.com to check your credit report. It’s free and you can do it once a year. If there’s something incorrect on the report, you can challenge it. Removing old or incorrect stuff from your credit report will cause your FICO score to rise, and that can save you money.
4) Thou Shalt Pay All Bills On Time.
Paying your bills on time helps your credit score and keeps you from having to pay fees. Do it!
5) Thou Shalt Avoid ID Theft. Buy And Use A Shredder, and Thou Shalt Not Fall For Phishing Scams.
ID Theft sucks. It’s not always your fault, but you can take simple steps to help prevent it. Be aware of phishing scams and don’t fall for them. Always type urls into your browser, don’t follow links from emails. Don’t save your banking passwords in your browser or on your computer. Buy and use a shredder. None of these steps takes much effort, but they go a long way towards protecting you. Sure, your credit card protects you from a lot of the financial damage from ID theft, but there’s no reason you can’t be responsible about protecting yourself.
6) Thou Shalt Take Advantage of No Interest No Payments Financing Deals, But Thou Shalt Pay Them Off On Time.
No interest, no payments financing can be great, but you’ve got to ignore the “no payments” part. Make payments. If you don’t, once the “no payments” period is over, you’re going to get hit with interest from the date of purchase… and that interest rate can be huge. Don’t do this! Use the “no payments” period to pay the item off, then you’ve used the store’s money for free.Yay!
7) Thou Shalt Avoid Interest On Consumer Debt. Thou Shalt Try To Pay Interest Only On Student Loans, Mortgages And Car Loans.
Sort of self-explanatory. It’s not a wise investment to be paying interest on soap and tacos. If you don’t have enough money to pay your balance off every month, look for ways to cut your spending.
8) Thou Shalt Keep Thine Credit Utilization At A Reasonable Level.
Credit utilization is important to your FICO score. Basically, you don’t want to use all the credit available to you. Don’t max out your credit! Lenders will approve you for more than you can afford. Remember that.
9) Thou Shalt Not Cancel Credit Cards, Thou Shalt Try To Keep Them Open So As Not To Shorten Thine Credit History.
Length of credit history is important to your FICO score. If you don’t want to use a card that you’ve had for a long time, that’s fine, but don’t actually cancel the card. Just don’t use it, unless it has an annual fee and you really want to get rid of it.
10) Thou Shalt Not Constantly Obsess Over Thine Credit Score. Life is too short.
Following these commandments should help your credit score, but remember that its not written in stone. It’s more of a snapshot than a grade. It can always go up and down, and it will. While it’s important to be mindful of your credit report, don’t let it ruin your life. Smile.
We know you have your own commandments to share, so leave them in the comments and help our readers learn about managing their credit wisely!