Should people really care about their credit? Why is credit important? Our guest for today is Becky Frost, the Senior Manager of PR and Consumer Education for Experian Consumer Services and she will walk us through why we really should pay attention to our credit and how to effectively manage it.
In this podcast episode
• How credit affects us and the reasons why credit is important, including how it affects: our ability to get the best rates for loans, whether or not weget approval to rent homes/apartments, the rates we get from our utility providers, how big of a deposit/down payment we need, getting approval to purchase cellphone contracts or simply the ability to get more credit.
• The impacts of credit scores in our daily lives such as getting jobs, how it affects our insurance rates, the effects of it in the interest rates we pay in our credit cards, and how it can ultimately help in attaining our dreams.
• The factors which affect our credit scores:
Payment History – Do you pay your bills on time? How far late are you paying them?
The Mix of Credit Usage – Do you have a mortgage or credit loans? Do you max out your credit card accounts?
The Age of Accounts – How long have you had each account? If the lender has more information to look back on how you manage your account over the years, it typically is a positive thing.
The Account Type – Lets the lender see what type of credit you have been using whether it be mortgage, credit cards or student loans. This information helps them assess the risk of giving you more additional loans or opening other lines of credit and of whether or not you are likely to pay them back.
Inquiries – How many times within the last 24 months have you applied to open a new credit account?
• The range of credit scores and what score number you should strive to get.
• Wise decisions that can make you a low-risk borrower and positively impact your credit.
• How to use credit wisely and not go into debt this holiday season.
Quotes from Becky
“Credit itself is not bad, it’s the way you manage and work with it that can feel overwhelming.”
“Don’t stop cold turkey and never use credit again. That doesn’t do anything to build your profile. Instead, find a way that works for you to use credit. Use it sparingly and pay it off every month.”
“A lot of times parents teach their children how not to engage in credit instead of teaching them how to successful engage and work with credit. It’s all about financial education and how you can improve your financial literacy.”
“Check your credit report every year.”
“Make a budget, make your plans realistic and stick to it.”