10 things you can do to manage credit

Coming out of school, it’s important to start benchmarking your credit score and building good credit. Here’s how.

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Think of the last time you signed up for a cell phone plan. In today’s technology climate, it probably wasn’t long ago. But before the phone retailer handed you that shiny new device, chances are they ran a check on your credit history before the sale was approved.

This is just one example of how credit plays an important role in everyday life. But how do you learn how to manage credit?

Fortunately, understanding how to build and maintain good credit can be as simple as knowing when you should and shouldn’t borrow money and knowing the consequences when you don’t pay bills on time. Here are 10 things you can do to manage credit:

1. Monitor your credit regularly

Make sure you stay on top of your credit history and get a free copy of your credit report from the three credit bureaus — Equifax, Experian, and TransUnion — annually.

2. Know your credit limits

Avoid being close to or maxing out the limits on your credit cards, which may negatively affect your credit score. It’s a good idea to keep your balance on revolving lines under 30% of your limit.

3. Know that good scores equal good rates

Remember: Better credit scores may help get you better credit interest rates. While this may not seem important now, getting the best interest rates possible will pay off when it’s time for you to buy a car or home.

4. Don’t make late payments

Pay on time. The first missed payment has the largest impact on a credit score, so don’t miss payments. If you are late, don’t be 30 days late; and if you have difficulty, call your lender.


The first missed payment has the largest impact on a credit score, so don’t miss payments.


5. Know your debt-to-income ratio

Since lenders look at the amount of debt you have compared to your monthly income, try to keep your debt-to-income (DTI) ratio below 35%. A simple DTI calculator can help you determine your ratio.

6. Start with secured credit card

If you need to establish credit, consider a secured credit card. A secured credit card can be used like any other credit card and helps build your credit over time (unlike a debit card). The main difference is that a secured card requires a security deposit when you apply, which is equal to your credit limit. If you deposit $300, your credit line (the maximum amount you can spend) is $300.

7. Pay down highest interest rates first

When trying to pay down your debt, whether it’s a student loan or credit card balance, pay down your debt with the highest interest rate first. Doing so will help reduce the total amount you will need to pay over time.

8. Live within your means

Set a budget and live within your means to avoid using credit and overextending yourself financially. Wells Fargo can help you establish your budget by analyzing your current spending and saving habits in My Money Map.

9. Pay more than the minimum

As much as you can, pay more than the minimum due on your credit card, which helps you pay down debt faster and may help improve your credit score. Better yet, pay off your balance in full each month.

10. Set up account alerts and autopay

Sign up for email and text alerts1 to track your account balance or available credit, monitor your activity, and remind you about upcoming payments.  Set up automatic bill pay, to help ensure that you pay your bills on time and help build a positive credit history.

Finally, don’t forget to periodically check your credit score. Wells Fargo customers have access to their FICO® credit score through Wells Fargo online, so your credit score is never more than a few clicks away.

For more information about ways to establish or improve credit — or better manage debt — visit Wells Fargo’s Smarter Credit™ Center.