Earlier this morning I called in to my credit card and requested a credit limit increase (CLI). I ended up getting a 50% increase on my card; a relatively huge boost for me considering I have three cards and this one had the highest limit on it to begin with.

Getting CLI’s is a good way to help your credit, IF you handle it with care. Just because I got an increase on my card doesn’t mean that I will be using it more. I still will carry no balance on that card, even though I “could afford” to charge everything and pay it off month by month…of course, I’d have to take a hit on my credit for a while.

Why will getting a CLI help my credit? Look at the picture below:

Part of the ‘Amounts Owed’ also looks at your overall utilization - how much of your credit you are using in relation to how much you have available. By getting more available, I am utilizing less of my credit percentage-wise.

There are other things to help you keep your credit in good standing. As you can see, your payment history is the most important factor. Not paying your bills on time severely hurts your credit, as does maxing out your cards even if you do pay the minimum each month. For that reason, I pay off my cards in full every month no matter how much I have on there. Sometimes it’s hard to remember that I don’t necessarily have all the money I need to pay for something in the bank, and that’s where most people will run in to trouble.

Credit History is the one thing that me, and most other college students, are getting the shaft on. There’s no way for us to really improve that because of its nature; the longer your history is, the better it is for your score. It shows that you can manage credit over a period of time. Being added as an Authorized User on a card of your mom or dad can help this, as it should show up on your credit report as being your card also; thus, if they’ve had a card for 10 or 15 years, it’ll show that you’ve had the same. I even heard of somebody who was 18 have a credit history of 20 years because of that! Be careful, though, because if your parents have late payments or that account isn’t in good standing for whatever reason, it could hurt your score.

Also not applying for a whole slew of new credit cards if you need good credit to get a home or car loan is advisable. Although not the biggest factor by any means, lots of inquiries for new credit can be alarming for some lenders. I try to only apply for cards when I really feel I need them, and as of right now I have no use for more cards; I’ve got three right now, one of which is a store credit card (I’ll talk about these in the future), and only use one for daily purchases.

Perhaps one of these days I’ll make a guide to understanding credit and how, from what I know, to best utilize your available credit.

I’ve seen many complaints on other blogs about how qualified a blogger is to write about finances. Most people who write about finances, as far as I’ve seen, are not professionals in regards to finances. I’ve seen people who are writers, engineers, and other. No matter your occupation, finances are important for helping plan your future.

Why then, should you listen to what a student has to say? Second (or third, or more) opinions on a subject are always healthy.  As a college student, I can relate to many different types of people - other students, younger people who are not students, people without jobs, and people with low incomes. Much of what I read on financial forums doesn’t pertain to me; I don’t have thousands of dollars to invest. I don’t have expendable income. I am a poor college student squeaking by on a 30-hour-a-week job at minimum wage. Because of that, and because I’m still managing to not only stay afloat but also improve my financial situation, I think it’s easier for those people in situations like me to relate. Sure, I’ll talk about things that the middle and upper classes can endulge themselves in that I cannot; but I will also relate it to how those of us with less income can get ahead. Too long have low-income families and students gone unnoticed in the financial world. People tell me it’s nearly impossible to save for retirement making less than $20K a year; I’ll use my experiences to show you how I am saving for the future and hopefully you can take something out of that.

As always, take anything you read with a grain of salt. I’m not perfect. I will make mistakes on here. If I do, just kindly correct me; it’s not the end of the world. You will make mistakes, too. To quote Batman Begins: “Why do we fall down? So we can learn to pick ourselves up.” Let’s learn.

Today the Federal Reserve met again and decided to cut rates - by half a percent. If you recall, last week the Fed also cut rates by three quarters of a percent, meaning a drop of 1.25 percent in the past 8 days. Rate dropping certainly isn’t something new - the Federal Reserve cut rates down by five percent over a one-year period in 2000. Nonetheless, such a huge decrease in rates has caused some Americans to become alarmed, and others to be confused.

Why does the Fed cut rates? What does it do? The Federal Reserve essentially sets the rate at which banks can borrow money from other banks. The lower the rates, the more money banks can borrow and thus give out to people in the form of loans for homes, cars, and other expensive goods. Historically, the Fed has cut rates drastically when they fear a recession - an overall slowing of the economy for six months - is imminent. It’s hope, then, is to jump-start the economy. By creating lower interest rates for banks, they are able to lend out money to consumers at lower interest rates. This is generally good news for people interested in purchasing a house, car, or anything else one might need a loan for in the near future.

The bad news is that for people like me, the Fed cutting its rates kind of sucks. With last weeks .75% rate cut, my online bank account at IGN dropped its rates a bit. I can only imagine that this rate cut will do the same.

Hopefully the combination of the tax refund (still unsure how I feel about it) and rate cuts will help jump-start the economy a bit.

Things are getting pretty close to situated…should be up and running by the weekend.

I’d like to welcome everybody to My Two Cents, a financial blog where I throw out my two cents about finances and things happening in the world. Please bear with me as I update the blog and such over the next few days.