Credit 101

5 Credit Rules Everyone Should Follow

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2. Don’t bump against your credit limit

Image: Daniel Rossi

Following payment history, credit utilization ratios — essentially how much credit you have available to you versus how much you are actually using — play a big role in shaping credit profiles. To keep scores from taking a dive, it’s important to avoid bumping up against credit limits. Instead, try to only utilize 25% or less of all your available credit at any given time, says Deatra Riley, financial education manager for non-profit credit counseling organization CredAbility.

And don’t let anyone fool you into thinking you need to carry balances to give your score a boost.

“I have never seen a credit scoring model award points for that,” Carlson says. “It’s really about the account being paid as agreed.”

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