5. Know your debt-to-income ratio
Since lenders look at the amount of debt you have compared to your monthly income, try to keep your debt-to-income (DTI) ratio below 35%. A simple DTI calculator can help you determine your ratio.
6. Start with secured credit card
If you need to establish credit, consider a secured credit card. A secured credit card can be used like any other credit card and helps build your credit over time (unlike a debit card). The main difference is that a secured card requires a security deposit when you apply, which is equal to your credit limit. If you deposit $300, your credit line (the maximum amount you can spend) is $300.
7. Pay down highest interest rates first
When trying to pay down your debt, whether it’s a student loan or credit card balance, pay down your debt with the highest interest rate first. Doing so will help reduce the total amount you will need to pay over time.
8. Live within your means
Set a budget and live within your means to avoid using credit and overextending yourself financially. Wells Fargo can help you establish your budget by analyzing your current spending and saving habits in My Money Map.
9. Pay more than the minimum
As much as you can, pay more than the minimum due on your credit card, which helps you pay down debt faster and may help improve your credit score. Better yet, pay off your balance in full each month.
10. Set up account alerts and autopay
Sign up for email and text alerts1 to track your account balance or available credit, monitor your activity, and remind you about upcoming payments. Set up automatic bill pay, to help ensure that you pay your bills on time and help build a positive credit history.
Finally, don’t forget to periodically check your credit score. Wells Fargo customers have access to their FICO® credit score through Wells Fargo online, so your credit score is never more than a few clicks away.