By Katie Moore, GreenPath counselor, Detroit office

Credit is a very important tool to have in your personal finance arsenal. When used wisely, it can help save you money, reduce interest rates on loans and more. We recently compiled some do's and don'ts, when it comes to helping build your credit.

DO pay your bills on time.  Although, of course, it is important to pay all bills by their due date, to build credit, this means paying bills reported to the credit bureau on-time.  Rent and utilities are typically not reported to the credit bureau but a mortgage, car loan, student loans and credit cards are so be sure to pay on time.

DO bring past due accounts current.  If an account is reported as past due, work towards bringing that account up to date as quickly as possible and keep it up to date.

DO check your credit report regularly for errors.  If you request copies of your credit report for yourself, this will not hurt your credit report.  Everyone is entitled to a free copy of their credit report for free through www.annualcreditreport.com.

DO dispute any inaccurate information on your credit report.   Unfortunately, mistakes are common so it is important to make sure everything on your credit report is accurate.  

DO consider automatic payments.  If you sometimes forget to pay bills, automatic payments may make sense.  Some creditors will even split the payment to correspond to your pay schedule.  For example a mortgage company may be willing to set up an automatic withdrawal biweekly so you pay half of your mortgage with each paycheck.

DON’T carry more than 30% of your credit limit.  A common misconception is that if you have a credit card, you need to charge something and then make the minimum payments to build credit.  This is not true.  You do not need to carry a balance on your credit card in order to improve your credit score.  Ideally you are not carrying any balance on your credit card but if you do, try to keep the amount owed under 30%, more than that will actually hurt your credit score.  

DON’T  apply for new credit too often.  Any time you apply for credit it counts as an inquiry on your credit report so don’t apply too often.  

DON’T expect immediate changes.  Your credit score is  basically a three digit number that indicates to a potential creditor, if I give you credit, will you pay me back.  It makes sense that your score cannot change overnight since creditors want you to pay them back consistently over time.