Loaning for small items like your gadgets and paying them on time is a good start.
• Start Early.
Planning to apply for your first credit card
? Go for it! You can start now and build a great credit reputation by abiding by the rules and paying on time. Once you need a bigger loan like for a car or a house, you’ve already set up a good credit rating and will immediately get an approval. The discipline you instill in yourself today will have a good payback in the future. Just be really careful with your card purchases and payments so you won’t risk piling up on debts at an early age instead.
• Keep it a Minimum. Do not hoard on credit cards! Although keeping a number of credit cards can be good for your rating, try to keep it to just a few that you can manage and not run away from in the future. Every time you apply and use a new credit card, it goes straight to your records and banks can use these against you if they see some questionable habits.
Always think twice before using your credit card.
• Be Consistent. One of the biggest factors that banks consider when you apply for a loan is how good you are with your payments. Being consistent and paying on time means that you are good at keeping up with your promises. It gives banks the impression that you’ll also keep up with your new loan. You can schedule a reminder on your phone whenever your credit is due or even sign up for an auto-debit with your bank to avoid missing your payment dates.
• Don't Max it Out. As you get better with your payments, you also get better rates or credit limit. But be wary of maximizing your credit. Better keep your usage at a minimum and base it on how much you can really pay per month. Maxing your card out means acquiring huge purchases and high payment obligations which could likely lead to a revolving debt. With a revolving debt, you carry a balance or unpaid amounts from month to month that can end up to your debt piling up together with the corresponding interests as well. In the United States, a popular rule is keeping it at 30%. If you have a credit limit of PhP100,000 better keep your card expenditures at PhP30,000 or below.
• Check the Bills. Even if the credit card statement comes out late, still make it a point to review them instead of just relying on your receipts. Although this is unacceptable, there are instances in which a bank or a store charges you incorrectly. There are also times that you might spot some fraudulent activities, like another person using your card. These charges, if left unnoticed will also cause you poor rating, giving an impression that you are not good at making payments.
Whether you’re just starting out with your credit card or aiming for that dream car, you can prepare now and set that credit ratings right.