Credit is something that is a part of being an adult, whether you like it or not.  In order to make sure that you know how to use it correctly, it’s essential to get your hands on all the facts possible about it.  

If you’re just starting to look into getting credit for the first time, then take a look at some of the most important things to know.

Credit Is Important

Unfortunately, a lot of people make the mistakes of failing to realize how important having credit is until they need it.  Don’t mistake credit for only buying things on a card. Credit is necessary to buy a home, apply for an apartment, and even get a cell phone contract. 

In the world of credit, no credit is the same as bad credit.  The way that you get bad credit is by various negative marks on your credit report.  If you have a judgment against you, unpaid bills, and late payments, your score will be affected. A maximum credit score is 850 points.  Anything below 670 points is considered poor credit. 

It Isn’t Free Money

One of the biggest reasons why people have a negative connotation of credit is because they abuse it and pay the consequences later.  Credit is not free money that arrives in the shape of a card.  

Everything that you spend on it you’ll have to pay back with interest.  So, make sure that you’re not using it like cash. It’s not the same thing! 

Credit Takes Time To Build

Credit can takes years to build.  Don’t beat yourself up if you don’t see changes overnight.  By committing yourself to taking the right steps, over time, it will gradually increase. 

Your credit score will go up the more that your history reflects that you’re a responsible borrower who doesn’t leave debts unpaid. 

Keep Your Balances Low

Even though you may be given a certain amount of credit that you’re allowed to take out doesn’t mean that you should use it all.

Experts recommend keeping your total utilization no higher than 30% of your total allowance.  Going any higher could result in a negative impact on your credit score, and potentially find yourself in unmanageable debt.

By applying the right tips and practicing healthy spending habits, you can build a favorite credit score for yourself.  It may not seem important now; however, one day, when you want to buy a business or a house, your credit score will be the determining factor.

Start putting in the work as early as possible to reap the positive results of your efforts in the future.  You won’t regret starting to build your credit as early as possible!