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I’m always amazed at how credit-card companies successfully entice consumers to use credit for whimsical high-end purchases. I know you’ve seen those American Express commercials where someone is in a retail store about to make a purchase only to have the sales clerk whisper that the card has been declined because it’s over the limit. Rather than sending a healthy message to consumers and stressing the importance of credit management and using cash, the credit-card company simply recommends a “no-limit” credit card and encourages excessive spending.

Now, I know credit-card companies are in the business to make money. And for them to make money, we have to stay in debt.

There are definitely do’s and don’ts to using credit cards, though. And if you plan to finance a home or get the best deal on an auto loan, you need to learn how to use them like a pro.

Getting Starting? Shop Around

There are credit cards available for every person and every lifestyle. If you’re just starting out, a secured credit card is your best option. Anyone can get approved–even people with no credit history or bad credit. But there’s a catch. You’ll have to pay a deposit, and these cards feature a small spending limit. Then again, the idea is to build credit―not get into crazy debt, so a small spending limit shouldn’t be a big deal.

Use (Don’t Abuse) Credit Cards

It isn’t enough just to have a credit card. To build a credit history or clean up past credit mistakes, you have to occasionally use your credit card. If you don’t, credit-card companies consider your account “inactive,” and your credit score won’t improve. I’m not suggesting taking the card and going on expensive shopping sprees or treating your girlfriends to afternoon spa breaks. Instead, use your credit card for small purchases, such as gasoline or the occasional meal out. As long as you’re able to pay off the balance at the end of the month, you’re golden.

When Is My Bill Due?!

Nobody likes to pay bills, and if you owe several thousands of dollars on a credit card, your minimum payments may amount to hundreds of dollars each month. In that case, I can understand why someone would “mistakenly” forget the bill or “conveniently” lose the statement. But if you want to use credit cards like a pro and improve your finances, you’ve got to stay on top of due dates. Every late payment knocks points off your score (between 5 and 20 of them), and it can take months to recover. But if you just don’t want to deal with writing checks, buying stamps, and going to the post office, consider an automated bill-pay system.

High Debt-to-Income Ratio = Lower FICO Score

Credit scoring is complex, and even some credit experts admit that they don’t fully understand the process. But they do acknowledge that on-time payments and credit-card balances account for approximately 70% of your credit score. Pay your bills on time and keep your balance low, and you can easily acquire a good credit score over 700.

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