Happy Get Smart About Credit Day!
Sure, it's not one of those days where you exchange presents or invite family over for dinner, but taking the time to learn about your credit is something to observe.
The day is sponsored by the American Bankers Association Education Foundation, which is sending out more than 3,300 bankers nationwide to help educate students about building better credit. Today marks the ninth year the foundation is recognizing the day.
"Survey after survey indicate that young people just don't know enough about credit -- how to build it, how to use it responsibly and what factors impact a credit score," said Laura Fisher, executive director of the foundation, in a release. "Today's lessons provide an opportunity for young adults to get the facts on how to use credit responsibly straight from the experts."
If you or your student can't take part in the live discussions, online lessons, including tips, quizzes and more, are available at the Get Smart About Credit website.
As a supplement, here's my two cents. Make that a nickel:
- Don't avoid credit. In order to build a good credit history, you need some credit to begin with. Start small, either as an authorized user on a family member's card or with a secured credit card.
- Pay your bills on time every month. Payment history accounts for the largest chunk in making up the FICO credit score, the most widely used score.
- Aim to pay off the entire balance every month. While the FICO credit score doesn't differentiate between paying off the balance and paying only the minimum, getting your balance to zero every month helps keep your debt under control.
- Don't get near credit limits. If you have one credit card with a limit of $500 and you consistently charge $250 or more every month, that will hurt your FICO credit score. Use a very small percentage of your available credit, less than 10 percent, to demonstrate financial discipline.
- Gradually add credit. If you have managed one credit card for a year, think about getting another. Or, consider other types of credit if you need it, such as an auto loan, mortgage or student loan. The mix and length of credit helps to boost your score.
Do you feel you know enough about credit scoring and building better credit? What confuses you?
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