Managing Your Credit Wisely Can Pay Big Dividends

For many consumers, credit cards and loans have become a vital way to attain a better lifestyle. Unfortunately, some people let their credit get the best of them, thinking they can "play now, pay later."

In fact, a little lapse with credit now can affect your life for years to come, making getting a mortgage, car loan or business loan a more difficult and costly task. But there are ways to avoid falling into that trap, according to Chicago-based TransUnion, a leading consumer credit reporting company. You can improve your credit profile and financial reputation by learning how to manage your credit and improve your credit score in the process. A credit score calculates your creditworthiness - your ability to qualify for new credit and repay debts - based on the most recent information in your personal credit file maintained by credit reporting companies

Your ability to obtain a mortgage, auto loan or credit card depends on both your past credit behavior and your current ability to repay the amount you want to borrow. Lenders use a variety of tools to decide whether to extend you credit, such as your credit report, information you supply on an application, and your credit score.

To establish and maintain a healthy credit profile, it is important to manage your credit wisely by:

* Controlling spending. If you are financially overextended, you should set up a payment plan or budget and regulate your spending.

* Remembering to pay all of your bills on time. When you are delayed or delinquent in a payment, late fees are charged, more interest accrues, and your credit report is negatively affected.

* Maintaining a minimum number of credit cards. Creditors look at your potential for going on a spending spree and falling too deeply into debt. The more credit cards you have, the greater your debt potential. It may not always help you to close existing accounts; but do think twice before taking on additional debt.

* Keeping your debts reasonable. Financial experts say that non-mortgage debt payments should not exceed 10 to 15 percent of your take-home pay each month. If your debts are higher than that, try to reduce them before applying for another loan.

* Avoiding unnecessary inquiries. Any time you authorize a creditor, employer or other business to check your credit, an inquiry is added to your report. If you have a large number of inquiries in a short amount of time, creditors may decide you are either applying for more credit because of financial difficulties or taking on more debt than you can repay.

* Contacting your card issuer immediately if you were unable to pay your bills on time or if you found an error in a bill. Be sure to get any complaints or corrections in writing.

* Checking your credit report on a regular basis. For most people, once a year is sufficient to make sure lenders are reporting accurate information about your accounts. If you move or experience other significant changes in your life, it may be helpful to check your report more frequently. A copy of your credit report and score can be ordered from TransUnion by visiting, or by calling 800-888-4213 if you are entitled to a free credit report. To order your report by mail, write to:
TransUnion LLC
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022

If you need help with any of these tips, you may want to seek the advice of a not-for-profit credit counseling service. These organizations will work with you to arrange repayment plans for debt, help you budget your income and teach you how to manage your credit. Unlike scams run by credit-repair companies, credit counseling services allow financially overextended consumers to successfully rebuild their credit reputation.

Careful management is the best way to keep your credit in good standing - and that's worth a lot. Smart consumers are the ones who learn more about managing their money, who establish and build a good credit history, and who avoid hidden traps that can easily pull a person into a deep hole of debt. For additional tips on how to improve your credit profile or to obtain your credit report and score, visit the TransUnion Web site at: or call 1-800-888-4213.

Michelle Blechman is Chief Marketing Officer of TransUnion Consumer Solutions, a wholly owned subsidiary of leading global information solutions provider TransUnion LLC. She oversees the team that brings the company's consumer products to market - including the online TransUnion Personal Credit Report and Score.

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