Keep Tabs on Your Credit Score
On October 20 this year, the National Get Smart About Credit Day will take place. This national day promotes learning about good credit to young people annually and is part of the Get Smart About Credit (G.S.A.C.) program originated by the American Bankers Association. The younger you learn about credit the sooner you will be in a more powerful position financially.
“Your credit score is a central part of understanding how credit works,” says Richard Eden Senior vice president of David Lerner Associates, “ Understanding how to minimize your debt and maximize your credit score as early on as possible will help you when you want to start entering the property market and investing. Learning sensible financial habits when you are young is a good grounding for later life.”
What affects your credit score?
Here are three of the main things that can make your score go up or down. There are other factors, but these are the biggest factors to consider.
Amount of debt you carry
This makes up 30 percent of your score. The more debt that you have and aren’t able to pay off make your credit score worse. If you’re able to pay off your credit cards each month or at least pay down the balance, your credit score will improve. Essentially the more you owe and the less you pay will affect it negatively
Late payments and payment history
This represents 35 percent of your credit score! Each time you make a late payment on a card or a loan will be reflected on your credit report. Pay as early as possible but most certainly make sure that you pay on time. If you use online banking make sure that there is enough time for funds to clear into the relevant accounts. Avoid late payments at all costs.
Collection agencies
If you have been reported to a collection agency for a debt that you can’t pay it will affect your credit score drastically. Any incorrect reporting to collections agencies needs to be reported and resolved as fast as possible. The sooner you rectify this inaccuracy the quicker your credit report and credit score can get back on track. Any errors can affect your credit score. If people have cloned your identity or your credit cards be certain that aren’t any outstanding debts that are in your name.
Get smart about credit in 2022 and start on the road to a better financial future. Make it a routine to check your credit score and maintain it. Your credit score is your responsibility.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC