Published on 06/04/09

Use credit wisely

By April Sorrow
University of Georgia

People are tightening their economic belts these days, and so are banks. The days of limitless credit may be over. However, it’s still a valuable financial tool if managed wisely, says a University of Georgia financial expert.

“The ability to use credit to help you get the things you need today and pay for them tomorrow is both your most valuable asset and your biggest liability,” said Michael Rupured, a consumer economist with UGA Cooperative Extension.


Some common credit dangers, he said, are:

• Using credit cards to live beyond your means. The key to financial security is to spend less than you earn. Credit cards allow you to spend more than you earn. Using them to maintain a lifestyle you cannot afford is a financial disaster in the making.

• Relying on creditors to set credit limits. It’s important to set your own credit limits to avoid taking on more debt than you can afford.

• Carrying a balance on credit cards. Learn to pay off credit card balances in full each month. You avoid any finance charges when you pay the full balance each month.

• Making only the minimum payment on credit cards. If you pay only the minimum payment on your credit card statement, it’s going to take you a long time to pay off the balance. If you have multiple cards, pay as much as you can on the one with the highest interest rate and the minimum payment on the rest.

• Buying the wrong items on credit. Unless you pay off your balance in full each month, using credit cards to pay for things like food, movie tickets or other consumable goods is unwise. You pay more because of the interest, and will be making payments long after the movie is over and the food is gone.


Staying abreast of the information in your credit report can help you keep your interest rates low. Credit reports influence a person’s ability to borrow money and the rate at which that money is lent. They also impact insurance premiums and employment.

A credit report includes personal information as well as your credit history. A detailed credit history includes information on any credit account opened in your name or accounts you are authorized to use. Accounts may include retail credit cards, loans from a bank or finance company, mortgages and home equity loans and bank credit cards. Medical bills, checking and savings accounts are not included.

The Fair and Accurate Credit Transactions Act entitles all Americans to one free copy of their report from each of the three credit report agencies: Equifax, Experian and TransUnion. Georgia’s Fair Business Practices Act gives a second copy from each agency to all Georgians, which means Georgians can get six free copies of their credit report every year. The first set of free copies can be requested through The second set must be requested through the individual agencies.

Requesting and reviewing these reports is important. Correcting inaccurate information and working to improve your credit history are keys to keeping your credit in good shape.

Rupured recommends spreading requests out so you can review an updated report every other month.


Access to your credit score may cost an additional fee. If considering paying for this service, make sure to buy a FICO score, as there are many options out there.

A credit score is a three-digit number between 350 and 850 arrived at by computing information contained in a credit report. Anything over 720 is considered very good. The average credit score in Georgia is 640.

“This number is based on complex equations from mountains of data collected and analyzed over the years about the bill paying behavior of consumers,” Rupured said. “Like it or not, the credit score is a remarkably reliable predictor of who is and is not a good risk for a loan.”

The lower your credit score, the more you will pay in finance charges for credit.

(April Sorrow is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)

April R. Sorrow is a science writer with the University of Georgia Public Affairs Office.

Brad Haire is the former news editor with the University of Georgia College of Agricultural and Environmental Sciences.