Understanding the ins and outs of credit is easier said than done, but following some basic steps can get you on the path to success. Use this list of credit dos and don’ts to help you get started.
Creditors look at your credit history as an indication of your future financial behavior. By using credit wisely, you can build a good credit history — making it easier to get loans with low interest rates, rent an apartment, purchase a car or home, and may even help you get a job. . An application is a contract, so read it carefully before signing. Credit card companies are very competitive, so interest rates, credit limits, grace periods, annual fees, terms and conditions may vary. and contact your creditor if you have trouble making payments. This will help you avoid late fees and a rising APR. To pay off your balance more quickly, pay more than the minimum due. If you are unable to make the minimum monthly payments, let your creditor know so they can work with you to create a more manageable payment plan. No one can legally remove negative accurate information from your credit history. The only thing that can fix a credit report is time and a positive payment history. . You have the right to know what is in your credit report. The Fair Credit Reporting Act requires each of the three major credit bureaus to provide you with a free copy of your credit report at your request each year. Your credit reflects upon you as a borrower and needs to be accurate. To get a free copy of your credit report, visit www.annualcreditreport.com.
DON’T spend more than you can afford.
DON’T be late to pay your bills
DON’T ignore the warning signs of credit trouble.
DON’T share your credit card number
|Information provided by:|
Diane Koontz, Mortgage Loan Officer
Central Bank • 522 4th Street • Sioux City, IA
Editor’s note: Get Smart About Credit Day is an annual event held in October where bankers visit local classrooms to share with students the “credit facts of life.” The ninth annual event will be celebrated on Oct. 20, 2011. Since it was started by the ABA Education Foundation (ABAEF) in 2003, more than 18,000 bankers have reached 704,993 young people. For more information about Get Smart About Credit Day, visit theABAEF’s website.
Credit is a loan and has to be repaid. It is your responsibility to manage your debts and to keep your commitment with lenders. Avoid reaching your credit limit or “maxing out” your cards. . Late payments can affect your credit rating and increase your balance. If you are unable to pay the minimum monthly payment, let your creditor know to see if adjustments can be made to your payment plan. If you consistently pay only the minimum balance, pay late, use cash-advances to fund daily living expenses or transfer a lot of balances, you might be in the “credit” danger zone. Talk to a financial counseling organization to regain control of your finances. . Never give out credit card or personal information if you have not initiated the transaction. Be aware of identity theft and phishing scams that ask for credit card numbers. If you suspect that your identity has been compromised, file a complaint with the Federal Trade Commission by calling 1-877-ID-THEFT (1-877-438-4338), or visit www.ftc.gov/idtheft.
DO know the power of credit.
DO read the fine print on credit applications
DO pay at least the minimum due on your bills
DO be wary of anyone who claims they can “fix” your credit report.
DO order a copy of your credit report annually