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3 Important Things to Remember About Credit

Any person’s first experience with credit can be a little confusing. You might have a lot of questions about how credit works and how to manage it wisely. Suppose you’re planning on taking a small personal loan in Birmingham, AL, and you’re not exactly sure what you’re getting into. You’re in luck as this guide tells you a couple of things you need to know about credit.

Get to Know What a Credit Report Is

The first step in building good credit is understanding what a credit report is. This gives you an idea of your current credit score and financial standing. A typical credit report contains your name, current and former addresses, your credit score, and your social security number, among other things. Make sure all this information is accurate and correct, as credit report errors do happen.

Next, you need to look at the amount you borrowed and confirm that it’s correct. You also need to look at all the accounts listed and if they match the amount you borrowed. Remember, you are entitled to a free copy of your credit report from each of the three credit bureaus each year.

Credit Isn’t Cash or a Cash Substitute

Credit cards can offer quite the convenience and are almost indistinguishable from cash. Unfortunately, being careless with your credit card can lead to a lot of trouble that could have serious consequences. People fall into this trap by thinking that credit cards are the same as cash. That is their first mistake.

Think of credit cards as cash-like currencies that must only be used in specific situations where cash can be quite troublesome to use. An example is making international purchases. On the other hand, cash is more universal and is something you can use in every transaction there is.

Credit Cards Should Be Used to Build Credit

An empty credit report isn’t something to be proud of. It actually closes a lot more doors than opening new ones. Without a credit report and a credit score to base your ability to pay for loans and financial transactions, it’s like you don’t exist at all. Don’t be afraid to use your credit card, but you need to use it wisely and responsibly. According to some experts on personal loans in Birmingham, AL, credits should be used regularly but should not exceed 30% of the available credit limit. If you spend more than that percentage, it could easily lower your credit score.

To put it simply, you need to find the perfect balance when it comes to spending cash and using your credit card wisely. If you want to avoid going over your limit, use your credit card to pay for some of your regular expenses like gas or utility bills.


These three tips may sound simple enough, but they can go a long way in keeping your credit in check. Remember always to spend wisely and avoid putting yourself in a situation where you can damage your credit. Maintaining good credit allows you to apply for loans, find better housing, and even purchase a new car. These are all perks that only people with good credit can easily enjoy.

Whenever you’re short on funds, it pays to know someone you can trust to lend a little helping hand when you need it. First Finance is here to offer a variety of personal loans in Birmingham, AL, that fit your needs. We offer affordable payment plans without any hidden fees. If you need fast service with clear and straightforward payment plans, don’t hesitate to call. Get started and apply for a loan today!

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