All About Credit

Credit score meter from poor to excellent.

March is National Credit Education Month which means there is no better time to learn the importance of your credit score. While it’s a complex topic, there are some key concepts you should understand to establish and maintain good credit.

The Importance of Credit Education

It shows you how you measure up

Credit scores can be confusing. The best way to understand your credit score is to see how your credit score compares on the spectrum. For instance, the national average personal credit score in the United States is 695. Determining whether your score is above or below might help you to decide how you want to manage your credit in the future.

It teaches you how to build credit

If you are just starting out and are new to the credit game, National Credit Education Month is the perfect time to start building your credit. There are many different tactics you can use to build your credit and many institutions have starter programs for young adults and students who want to build their credit. This can include credit cards with a very small balance resulting in low payments or small personal loans. Talk to your credit union or financial institution on how you can start to build your credit today.

It helps you improve your credit rating

Your credit score can have a huge impact on your financial life. Good credit is essential for getting manageable interest rates on cars, credit cards, mortgages, and many other financial investments. Knowing how to improve your credit score will prove to be imperative, as a bad score can inhibit you from making many major financial decisions.

5 Tips To Improve Your credit Score

1. Pay bills on time

Past performance is a predictor of future performance so pay all bills off timely – rent, utilities, loans, and credit cards.

2. Keep debt to a minimum

Understand your credit utilization ratio which is the amount of debt you carry (total amount of credit balances) compared to your combined credit limits; lenders like to see a credit utilization ratio of less than 30%.

3. Keep up the good work

The longer you can maintain a good credit rating, the better. Accounts that have been in good standing for a long time add to your credit score.

4. Open new credit accounts only as needed

Applying for credit results in a “hard inquiry” on your credit report which has a negative on your overall credit rating that can last for up to two years.

5. Check your credit reports

If you find inaccurate information on any credit report, you can dispute the information to have it corrected.

To learn more about credit and credit education, visit https://nationaltoday.com/national-credit-education-month/