Keeping Credit Options Open

In the current credit crisis, it's easy to get hung up on the idea of avoiding credit use at all costs. But if you are interested in keeping your credit rating high and your credit record working to your advantage, credit avoidance isn't always the best strategy.

Currently, I have five bank-issued credit cards (Visa or MasterCard) and one store-issued card (Best Buy). Two of the bank cards have a zero balance and I haven't been using them. One card I use for purchases that I have budgeted for (no impulse spending!) and pay off in full each month.  The other two bank cards have zero or very-low interest rates and the bulk of my credit card debt is divided between those two cards. My store card is also carrying a balance while I pay down an appliance purchase that still has a 0% interest rate for eight more months.

Although I'd love to just focus on paying off my balances, after reading an article on Kiplinger.com, I realize that if I want to keep all my current credit options open, I need to take one or two other steps. First, I need to make an occasional purchase (at least once a quarter) on the two cards that have zero balances. That will hopefully keep the banks from considering the accounts inactive and shutting them down. Of course, I need to make sure that those charges are paid in full each month so I don't add to my debt and incur more finance charges.

Second, I need to make sure that I'm never late with a payment on my other cards, not even a day late. A few months ago, I was a day late and I called the bank and explained that I just goofed up but I'd made the payment online as soon I realized my error. Because I had a good credit history with them, they didn't charge me the $39 penalty or keep the late payment on my record. But those days are probably over with now. I have no doubt that if I was a day late today, no bank would be so forgiving. So there's no slacking off--I really have to stay on top of all the due dates and not make any sloppy but expensive mistakes.

Although I don't have plans for any big purchases that will require credit, you never know when circumstances will change. I hope to be able to come through this economic messiness with my good credit rating intact.

Blogged with the Flock Browser