Smart Use of Credit

Credit can serve as a powerful safety net for you and your family, giving you the flexibility to make the purchases you need when you need them.

However, if used improperly, credit can affect your credit score, hampering your ability to obtain a mortgage or personal loan.

Here's how to make your credit work for you:

Pay in full, on time:

When you use your credit card, try to pay your balance off in full and on time. Otherwise, pay as much as you can afford, and make sure you meet the minimum payment each month.

If you're not sure you'll be able to pay your credit card bill on time, call your bank and ask to make alternative payment arrangements, including asking for a lower rate.

Limiting the number of credit cards you own can help you stay on top of your credit by reducing the temptation to spend money when you don't have it. Having just one card will also make it easier for you to stay on top of your expenses and make a budget.

Applying for a secured credit card can be a good idea if you're concerned about credit. With a secured credit card, your credit limit is based on the security deposit you've made into a particular account. In other words, if you've deposited $1,000 into an account, you now have $1,000 of secured credit on the card. Your security deposit earns interest while you build a better credit history.

Credit lines, a flexible alternative:

A credit line can be a much more flexible option for your borrowing needs than a credit card. Consider taking out a line of credit to consolidate your outstanding credit card debt at a lower rate. Taking this step can potentially save you money on interest costs.

Be careful not to apply for multiple credit lines at once in a short period of time, as this could send a red flag to credit rating agencies.

It's never too late to learn how to manage your money responsibly. Speak to your financial advisor or a qualified credit counsellor to help you improve your credit rating and create a solid financial plan.

Avoid the pitfalls of credit fraud. Read Card Watch: 7 Ways to Combat Credit Card Fraud and stay credit-safe.