A lot of people want to have a credit card – most for the convenience it offers as it gives you an option of going a little over your spending when you don’t have the cash to pay for something you need – may it be an emergency or just want something.

While paying your water bill or electricity bill is more than enough to help you establish your credit history – credit cards can help you as well. Credit cards gives a better option of being able take out a loan if you’re responsible on your spending.

Whether it’s your first time getting a credit card and want to establish history, or you want to improve your credit history, here are things you can do:

Pay your bills on time

Making a purchase with your credit card and paying it off on time gives a good impression that you’re capable of managing your finances effectively.

Avoid late payments

While avoiding making late payments seems impossible, there will be time when you are unable to make it in time for your monthly dues – may it be financial incapacity, emergencies or you just forget it, it still pays a lot to be responsible on your payments.

Get back on track with your payments

Sometimes we’re so busy with things that sometimes we can’t avoid missing payments. If you have done this, catch up as soon as you can, that way you can avoid getting a low credit rating. Makes sure that your overdue doesn’t go over 30 days.

Keep your debts low

Having a credit card is not an excuse to splurge. There is a rule of thumb that you must keep your debit-to-credit ratio at 30%. For example, if you have a credit limit of P25,000, your balance should be P7,500 or less.

Don’t go over your limit

Going over your credit limit is a red flag and you can get a bad rating for it. When you go over your limit, you will have to pay for the interest charge as well as a fee when you overcharge with your credit card.

Having a credit card is convenient – yet it can also be risky if you don’t handle your spending responsibly. With these tips, you can avoid getting bad ratings by keeping your records clean as long as you make these tips into a habit.


GoBear team

GoBear team

GoBear Team - Our content creators collaborate to come up with finance articles that will make financial literacy a joy to learn and financial security an attainable goal.