If you are planning on building your credit by using credit cards there are important things to remember. Always pay your credit card bills on time, if you can try to pay them off in full each month and never go over the limits on your cards. Another great tip is to never put more than 20% of your monthly income on credit cards this will keep your debt to income ratio down and keep paying them of manageable.

If you have an emergency and you have to put stuff on your cards make sure to keep the balance of each card at less than 30% and never go over 50% of the cards balance this keeps your debt to credit ratio down, so you don’t put negative marks on your credit.

For all of LearnKey’s Financial Literacy Month resources, visit learnkey.com/financiallitmonth

It is important to monitor your credit reports regularly, because errors do happen and it is your responsibility to make sure that you are catching these errors and are having them taken care of. No one else cares what your credit score is, so you have to care and you have to contact the credit bureaus that have made the errors to have them fixed.  You will want to check to see if you have closed, paid off accounts that are still reporting. You will have to file a dispute with the credit bureau and it may take up to 30 days to get a response. It will be worth it to get the errors off of your report.

It is also important to make sure that companies you want to report are reporting. Some student loan lenders are not required to report and may not be. If you have mostly credit cards and student loans you will want the loans reported because this will create a more equal balance between your revolving accounts (credit cards) and your installment accounts (home, auto, or student loans). This will help improve your score as well.

For all of LearnKey’s Financial Literacy Month resources, visit learnkey.com/financiallitmonth

When credit card offers start coming in the mail, make sure you know and follow the rules. This means that you need to read through the packet of information that came with the offer. Make sure you read the fine print. The likelihood is that they will highlight the best features like 0% APR on transfers and purchases, but they will not highlight that this is an introductory rate for the first year and the rate increases to 24% after that point. Search this kind of information out!

Once you are approved and sent the card you will get another larger packet of information in the mail and you should read this in depth as well. You need to educate and familiarize yourself about what you have gotten into and what your obligations are. If you can this is also a good time to set this card up through your online bill pay and enter it into your spending plan so that when the first bill comes you are all ready to pay it. To reiterate yesterday’s tip, I cannot stress enough how important it is to make your payments on time!

For all of LearnKey’s Financial Literacy Month resources, visit learnkey.com/financiallitmonth

If you do not have credit cards make sure you have other accounts in your name like your utility bills, cable, internet, and cell phone bill. Set these up so that you can start establishing positive patterns of behavior and a history. In order to do this it is essential that you make all of your payments and they are made on time. If you can do this it will show lenders and credit card companies that you are responsible and can be trusted to make good on your obligations of repayment to them.

Once you have done this and have established this history and patterns of behavior, you will have a better chance to be approved on an auto loan or approved for credit cards. Don’t get frustrated, it will probably be a slow process to improve your score, but you will see it improve and this will keep you moving in the right direction.

For all of LearnKey’s Financial Literacy Month resources, visit learnkey.com/financiallitmonth

Today starts our recognition of Financial Literacy month, and in honor we will be posting tips here in the blog each day of the workweek. Each of the next four weeks will have a theme, this week is credit, next week will be debt, then spending and savings, and the last week will cover spending plans . There will also be a free white paper available to you on our website for each of the themes.

Today’s tip: Building Credit

It is important to start building your credit, because a positive credit score is crucial to your finances. With a good credit score you can qualify for a home loan, get great interest rates on credit cards and loans, and you can save thousands of dollars throughout your lifetime in interest. 

Where do you start, if you do not have any credit cards or loans? The best place to start is by opening up a checking and savings account. This will help start building your credit history. It is also important to make sure that you keep accounts positive and do not overdraw your accounts or bounce checks. These can show up on you credit reports as negative marks. On the other side of this if you monitor your accounts and keep track of these accounts it can show positive behavior patterns.

For all of LearnKey’s Financial Literacy Month resources, visit learnkey.com/financiallitmonth