Credit isn’t free money 

A credit card is an important financial tool that allows you to buy today with the promise to pay later. It is a convenient way to always carry money, without carrying cash; and a nice way to pay great expenses gradually.  It provides financial support for an emergency, and allows you to establish a credit history. Credit cards can help you administrate your money.
 
People get themselves in trouble with credit cards because they spend more than they can afford. Usually, problems start because people get confused about how credit cards really work. Knowledge and careful spending will help you be in charge of your finances.

Credit score

Credit score is a system used by banks and lending institutions to determine if you deserve credit. It is applied even more severely when you request unsafe credit – meaning, credit lines and cards that don’t require payment warranties.
Creditors gather information about you and your credit experience, which they extract from your credit report. This information might contain a history of your utility bills payment, how many and what kind of accounts you have opened, late payments, collection actions, if you have requested credit recently, pending debt, and how long you have had it. Using a statistic program, creditors compare your information to the credit performance of people with similar profiles.   

Each creditor may use their own credit score method, different score methods for different kinds of credit, or a general score method designed by a credit score company. A credit score system grants points for each factor that helps foresee who has more probability to pay for debt. The total amount of points – the credit score – helps estimate how deserving of credit you are, or what are the chances of you paying back a loan by the established date. 
Preserving a good credit

A few simple rules can help you establish and maintain good credit history.

• Pay at least the minimum amount every month.
• Don’t stretch it; the least cards you have opened – meaning credit card loans – the better.
• Don’t spend now what you expect to receive later.
• Avoid transferring balances unless you are really getting a better interest rate.
• When you move, notify creditors of your new address, so that your statements arrive on time. If for any reason you don’t receive your statement, you still owe payment. If usual payment due date approaches and you still haven’t received your statement, call the customer service number listed on a previous statement. They can tell you the minimum amount, total amount and where to make the payment.
• Review your credit report at least once a year to make sure it is accurate. Serious errors might be showing – bad enough to cause credit denial – in a credit report at any time. Finding mistakes early will help correcting them faster.

Your credit history

What your credit history says about you

No work, earnings, or estate say more about your personal and financial future than your credit history. Having a good credit history will facilitate obtaining credit when you want it – for a house, a car, or a credit card – and even with lower interest rates. Your credit history is information about how you have managed your past financial relationships, which is available to the public. It usually contains the following information:

Identification: your name, address, and date of birth. You supply that information every time you apply for credit. Filling out forms consistently (like writing down your name the same way every time) helps reducing errors on your report. Information on your current and past jobs might also be required.

Credit:  creditors supply details like pending balances, credit limit, monthly payments and payment patterns, monthly for several years. Information about those accounts remains in your report for five years. 

Investigations: if you apply for credit with a lending institution, the investigations made by them will remain in your report for five years. Similarly, your report should contain a list of institutions that have investigated you.