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Managing credit correctly requires a certain amount of discipline. If you let your spending get out of control or take on too many loans, you could face big money troubles. That's why it's important to have some guidelines for borrowing sensibly. Here are five rules every consumer should follow to keep their finances and credit scores intact.

1. Make payments on time

Stellar payment histories are key when it comes to establishing good credit scores. Of all the components used to calculate most credit scoring models, paymeht histories have the largest impact. And one missed bill will certainly cost you. As this FICO study illustrates, a recent late payment can cause as much as a 90- to 110-point drop on a FICO score of 780 or higher. Missed bills can do further damage to your wallet, too, because late payments typically trigger penalty fees and increases in annual percentage rates.

To avoid both pitfalls, it's a good idea to set up automatic payments for your car, student and home loans so you don't get caught behind. With credit cards, it's always a good idea to pay off everything you owe, but be sure to make at least minimum payments each month before the billing cycle due date.

Additionally, "if you have problems paying bills on time, don't get a credit card," says Karen Carlson, the director of education for nonprofit agency InCharge Debt Solutions.

2. Don't bump up against your credit limit

After your payment history, your credit utilization ratio -- how much credit you are using as a percentage of how much you have available to you -- plays a big role in shaping your credit profile. To keep your scores from taking a dive, it's important to avoid bumping up against credit limits. Instead, try to use only 25% or less of all your available credit at any given time, says Deatra Riley, a financial education manager for nonprofit credit counseling organization CredAbility.

And don't let anyone fool you into thinking you need to carry balances to give your scores a boost.

"I have never seen a credit scoring model award points for that," Carlson says. "It's really about the account being paid as agreed."

3. Always consider your credit scores

Whether adding to or subtracting from your credit profile, it's important to consider what effect the move is going to have on your credit scores. Of course, to do so, you'll need to know what your credit scores actually are. Consumers should review their credit reports for errors and other issues at least once a year. You can do this for free by visiting

You should also pull your credit report before applying for a new loan. If the report shows blemishes that would lower your scores, consider building them up before you add any credit cards or installment loans.

"Be creditworthy when the opportunity arises," Carlson says, so you can get the best rate on each line of credit. High credit scores will also allow you to score the best rewards credit cards.

4. Understand the terms and conditions associated with all your loans

Terms and conditions vary from product to product, so it's important to read through every loan or credit-card contract before you sign on the dotted line. According to Brent Neiser, a senior director at the National Endowment for Financial Education, you should check the interest rates that are being offered and when they will be applied. Also examine fee structures thoroughly so you have a good sense of the costs associated with each line of credit.

Additionally, Neiser recommends that you ask, "What are the incentives?"

Riley also suggests printing out contracts and keeping them in a "safe, secure place" so they can be easily accessed should an issue arise.

5. Charge in accordance with your budget

 A credit card can be a powerful payment method; it allows you to earn points on purchases and may also get you access to exclusive perks and discounts. But the benefits of special offers can easily be wiped away if you don't control your spending. A mountain of interest-incurring debt will more than cancel out any rewards or other perks. To avoid winding up in dire financial straits, Carlson suggests using credit cards only as outlined in a written budget.

"This is the (rule) most people don't follow," she says, because it's very easy to think of a credit card as a financial lifeline. However, you need to be sure to use it to purchase only those items you could afford even if card wasn't at your disposal. You also need to make sure your budget contains a savings plan.

"Don't use a credit card as a replacement for your emergency fund," Carlson says. "Credit is a wonderful tool to meet the needs of positive events. It's not a tool for negative events."

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