Here's what you need to keep in mind when using various forms of credit.

There are three main factors used to determine your credit score. The first and most obvious factor is your payment history; have you been paying what you owe on time? The second factor is the length of time you've had lines of credit open - the longer, the better. Lastly, there's the ratio between the current balance on an account versus the limit of that account; though there are differing opinions on what exactly this ratio needs to be for you to get the optimal credit score, I've seen a consensus growing around 20%.

What if your credit is bad? How can you start digging yourself out of that hole?

1. Apply for a secure credit card. Instead of applying for credit all over the place, go for the sure thing; head to your bank and ask for a secure card - not a prepaid card. Refusing to use credit won't move your credit score anywhere. You need open trade lines to jump-start your credit, but they need to be safe. Having at least three well-managed trade lines of credit open will help you demonstrate that you're responsible.
2. Check out First Premier Bank. They'll give you a $300 credit card for $95 up front, and after one full year of making your payments on time, they'll return your money back. Remember: The size of the account doesn't matter; you don't get additional points for having a $10,000 credit card. It's all about ratios and percentages. Keep your balance as low as possible to maximize your credit points.

If you have any questions about improving your credit score or healthy credit usage, we can help you with some credit counseling. We're not credit experts ourselves, but we know the basics very well and can help get an extra 10, 15, or 20 points. If not, we can refer you to some reputable credit repair companies. Give us a call or send us an email anytime!