The importance of sound financial management is something that can and should be taught at a young age. Learning healthy credit habits can be one of the most valuable lessons a young person can learn.
What Affects Credit Scores
- Amount of debt you carry – Paying off the amount you charge to your credit cards each month helps to improve this amount. Showing that you are reducing debt each month gradually increases your score over time.
- Age of credit history – The older your credit history (and the longer it is in good standing) shows a trend toward reliable financial standing.
- Reports to collections agencies – Any inaccurate reporting to a credit agency needs to be reported immediately. The sooner you resolve an inaccuracy, the quicker your credit report can be corrected. Obtain a letter from the collection agency once you have been able to confirm the error and submit it to all the credit reporting agencies.
- Late payments – Any time make a late payment, especially on a credit card or loan, this will be reflected on your credit report. Pay early, pay on time. If you use your online banking system to make payments, remember to review your bank’s turn-around-time for payments. Take their delays into account and schedule accordingly to avoid any late payments.
- The number of hard inquiries for credit – If you are considering a loan for a car or house, each inquiry will be registered on your credit report. When your credit is in good standing, it doesn’t have a big impact.
- The number of accounts – Opening and closing accounts can have an impact on your credit score. Depending on the number of accounts, the impact on your score could be huge.
History of Get Smart About Credit Day
Get Smart About Credit Day was established by the ABA (American Bankers Association) to help encourage young people to get a handle on their credit from the very beginning.
By educating people on the forms of credit and how to properly increase, manage, and protect your credit score, they ensure that the coming generation will have smart investors who are able to improve their lot in life without being buried in debt.
To shed some light on the severity of the situation, one need only look at the average American household and the debt that they hold. It is not at all uncommon for American households to have over $15k in credit card debt alone, not including student loans ($49k), auto loans ($28k) and homes that often are in the range of $170-$175k.
Every year this debt only continues to rise, and that’s why it became imperative that the ABA begin educating people everywhere on how to protect themselves from the destructive force that is financial debt.
Presentations and instructional documents on how to ensure that families have a secure financial future are their stock and trade. Get Smart About Credit Day is your opportunity to join this movement and get educated on securing your credit for the future.
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