Financial Tips

5 Tips to Wisely Manage Credit

Having a respectable credit score is key to many financial decisions that affect your overall purchasing power. Here are five tips to help you wisely manage your credit.

Create and stick to a budget.
Credit card debt is no joke. Avoid this easy to make mistake by setting and knowing your own financial boundaries. To begin, track all your spending for one month. This is a great way to understand your spending habits which will allow you to create a personalized budget. Try creating a weekly and monthly budget to find what works best for you. Then the key is sticking to it!

Once you have mastered your budgeting skills, it is a great time to open a credit account. The length of your credit history accounts for 15% of your credit score so responsibly opening an account can help you start building a credit history. Remember to only use your card to make purchases within your budget because everything charged to your card must be paid back.

Do your research!
Not every credit card is made equal. Consider the different rewards, cash back options, and incentives that various credit card providers offer to figure out which would be most beneficial to you. When doing your research, it is important to understand the key terms related with owning a credit card:

  • APR – this stands for annual percentage rate. This is how much interest you’ll be charged for the balance you carry on your credit card from month-to-month. The lower the APR, the less you’ll pay in interest on your credit card balance. Credit cards often have different APRs for purchases, cash advances and balance transfers so you must ensure you know each. Also, if there is a low introductory APR, be aware of how long it is offered and what the rate rises to once that term is up as you will start to be charged interest on your balance.
  • Annual Fee – what you’ll be charged each year for using the card. Many cards have NO annual fee, so shop around for this perk!
  • Balance Transfer Fee – an amount that is sometimes charged to transfer balances from one credit card to another.
  • Cash Advance Fee – an amount charged when you are getting cash from your line of credit. A cash advance from your credit card can bail you out of emergencies, but it can become an expensive loan if you do not pay it off quickly. The APR for cash advances is often significantly more than for purchases.
  • Late Payment Fee – an amount charged if you do not make a payment to the credit card company by the due date.
  • Minimum Interest Charge – the lowest amount that will be imposed whenever you carry forward a balance.

Starting with one credit card is a great way to build your credit history and credit score. Over time, consider having a mix of credit types as this accounts for 10% of your overall credit score. You can consider an additional card for a dedicated purpose such as a gas card or different types of credit such as a student or car loan.

Make payments on time.
Payment history accounts for 35% of your total credit score – that’s the biggest chunk! Paying your bills on time makes lenders look more favorably on you because it acts as evidence that you are capable of repayment. By making payments either early or on time, you will also avoid late fees. Be sure to regularly check your accounts to ensure your payments are processed successfully and to be aware of any purchases that may have cleared after your payment.

Use, but don’t overuse!
Getting a credit card helps to build credit. By responsibly using your credit card, you are showing creditors that you are able to pay back debt. When using a credit card, credit utilization accounts for 30% of your overall credit score. This metric represents how much outstanding debt you have such as credit card balances compared to how much credit is available to you.

It is recommended to keep your credit utilization below 10%. So, if you have $1,000 in credit available you should aim to carry a balance less than $100. In doing so, you demonstrate financial responsibility and restraint.

Utilize technology.
Technology has come a long way since the first universal credit card’s introduction in 1950. Today, most credit cards can be applied for online. While applying for credit is easier than ever, you need to be aware of how many new accounts are opened at a time because new credit accounts for 10% of your credit score. Technology has also made it easier to keep an eye on your accounts. Consider downloading the corresponding mobile app for your credit card and setting up automatic alerts when your card is used. This can help minimize fraud and act as a reminder when you make purchases.

Following these tips can help positively impact your credit score and start you on the path to a strong financial future. More questions about managing your money? Univest is here to help! Contact us at 877-723-5571 or visit


Univest Bank and Trust Co. is Member FDIC and an Equal Opportunity Lender.