Getting Smart About Your Credit Score

Good credit opens doors. Not only can it help you secure an affordable loan, but it is also often needed for access to open everyday accounts, such as for your utility services and cell phone. It can help you land a job, boost your chances of securing an apartment, and even improve your dating prospects, according to research.

Whether your credit is “good” is determined by your credit history, which looks at your payment patterns over time and your credit score, which rates your credit risk at a moment in time. But it’s more complicated than that, and if you’re like many Americans, you may be confused by some of the details.

According to a recent Freddie Mac survey of homeowners and renters, one in three Americans isn’t aware that credit score elements such as the length of credit usage or having joint credit and loan accounts are reported to credit bureaus. Additionally, more than half of homeowners and renters aren’t aware that being behind on housing payment can result in an impaired credit rating, and nearly 60% don’t know or realize it can impact their ability to get a loan in the future.

To get a handle on your credit, consider these tips:

1. Pay on time. The best thing you can do to build, maintain or improve your credit is pay bills on time. The types of accounts considered for credit payment history include:

• Credit cards

• Retail accounts, such as credit cards from department stores

• Installment loans, such as car loans, on which you make regular payments

• Mortgage loans

• Student loans

• Finance company accounts, such as car dealer in-house lenders

2. Watch your credit card balance. If you allow your credit cards to reach high, unpaid balances, or if you only pay the minimum due, credit cards can cost you hundreds (and even thousands) of dollars in interest and can impair your credit.

3. Review your credit report annually. You’re entitled to receive a free copy of your credit report each year from each major credit bureau via annualcreditreport.com. You can also keep an eye on your credit score through free apps such as Credit Karma, NerdWallet, WalletHub or others. Be aware, however, the scores shown in these apps are not the same as FICO scores used by most lenders and creditors to make lending or credit decisions. Still, they’re useful for reviewing the financial activities affecting your credit.

4. Get savvy. Education has power. Learn more about managing credit by checking out Freddie Mac’s free suite of financial education resources, CreditSmart. Over the past two decades, more than 5 million consumers have benefitted from these tools and now this program can be customized by users.

“Financial education is personal. Whether you’re renting a home, are on the path to homeownership or saving for the future, our newly released curriculum empowers you to customize your experience and learn at your own pace,” says Cindy Waldron, vice president, Single-Family Housing Insights and Solutions at Freddie Mac.

To access these resources, which are available online or on mobile devices, visit creditsmart.freddiemac.com.

The impact of good credit on your life can’t be overstated. Use free resources to learn more about how it works. Then, stay on top of your credit by actively monitoring it and working to improve it.

(StatePoint)

Susan Brewer Service First Real Estate (636)936-8600