Using Debt to Improve Personal Credit

While it's important that you use your credit cards in order to improve your personal credit, you can easily damage your score by not using credit wisely. You can get a home mortgage without first having a credit card- it may be harder to find a lender that will work with you, but you won't always get stuck with a higher interest rate. Here are some tips on how to use debt to improve your personal credit.

*Limit the number of cards you carry. You don't really need more than one credit card- this counts store credit cards, gas cards and any other kind of charge card. Having too many credit cards will damage your credit history, and stores don't offer discounts for using their charge cards just to help you out. They know that most people won't pay off the entire balance each month.

*Keep your credit limit in check. You can call your bank and ask them not to automatically raise your credit line. This can help you rein in your spending; consider setting your limit at $500 or $1,000. That amount will accommodate a month's spending in most cases, and won't be too hard to pay off.

*Pay the balance in its entirety, every month. That's how you build your credit history- by proving your responsibility through paying your bill in full. Don't charge anything that you cannot afford to buy in cash

*Don't get lured in by free offers. Credit card companies offer things like free t-shirts, pizza and other gifts to entice you to sign up. You may be tempted to sign up to get the freebie, then cancel when you get the card. Canceled cards show up on your credit report- prevent the damage to your score by not applying in the first place.