The Importance of Credit Education
The past three years have been tough on Americans.
With record inflation, a high cost of living, and an unstable job market, many Americans are turning to credit cards to meet short-term purchasing needs.
As a result, the average credit card user carries a balance of $5,474. With interest rates continue increasing, that debt is getting much more expensive. As credit card balances balloon, they can cast a long shadow over your finances.
What do you know about credit? Do you know how to use your credit cards to build or improve your credit score? Do you know what a credit report is? Do you even know your credit score?
There are many month-long observances during March, but National Credit Education Month is perhaps one of the most important.
Observed in the United States every year in the month of March, this event aims to raise awareness about the importance of credit education and financial literacy.
What Is Credit Education and Why Is It Important?
Credit education is the process of teaching individuals about credit, credit reports, and credit scores. Financial literacy involves understanding the basics of personal finance and how to manage one's money effectively. Both credit education and financial literacy are essential skills for managing personal finances and building a strong financial future.
“The importance of credit education and financial literacy cannot be overstated,” explains Daniel Lerner, Executive Vice President for David Lerner Associates. “Good credit and financial literacy can lead to better financial stability, more opportunities for loans and investments, and a brighter financial future. “
On the other hand, a lack of knowledge about credit and personal finance can lead to financial problems and a lifetime of debt.
What Happens During National Credit Education Month
Various organizations and agencies, including government agencies, financial institutions, credit counseling services, and non-profits, sponsor National Credit Education Month.
During this month, credit professionals, financial experts, and lending institutions offer educational seminars, workshops, and resources to help consumers (the primary target of this annual awareness month) learn about credit and personal finance.
Consumers use the month as an opportunity to brush up on their credit awareness skills and knowledge of all financing options.
History of National Credit Education Month
National Credit Education Month was founded to raise awareness about the importance of building a positive credit profile and give strategies on how to work toward a good credit score and excellent credit history.
This event is sponsored by Credit Professionals International and Credit Education Resources Foundation to encourage Americans to:
- Build/fix their credit scores
- Clean up their finances
- Reduce their debt
Since credit can be hard to keep on top of, this event was created to ensure that any consumer who has or might consider applying for credit understands exactly what to expect.
How to Observe National Credit Education Month
You can observe National Credit Education Month by:
- Checking your credit score
Checking your credit score can help you monitor your credit health and keep track of any changes. This can alert you to potential issues like errors or fraud on your credit report. Checking your credit score can also help you identify areas that need improvement.
- Teaching your kids about debt
Teaching children about debt is an important step in helping them understand how to manage their finances responsibly. You can start by explaining what debt is, discussing budgeting, explaining interest, and encouraging saving.
National Credit Education Month is an important event that highlights the importance of credit education and financial literacy. It is a time for individuals to take stock of their financial knowledge and to seek resources and educational opportunities to improve their financial literacy and credit understanding.
Take the time this March to understand several key concepts regarding your credit. By doing so, you can best serve your present financial situation and set realistic financial goals.
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.
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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.