Many Consumers Still Lack Basic Credit Score Knowledge
In their third annual survey on consumer knowledge about credit scores, the Consumer Federation of America (CFA) and VantageScore Solutions found that many consumers still have major misconceptions about what influences credit scores and how credit scores are used. In fact, 54% of people answered they have not checked their credit scores within the past year. (Thirty-seven percent have never checked their credit report.)
Before the bad news, here's a bit of good: 94% of those surveyed realized that timely loan payments can help improve their credit scores.
About one-third to two-fifths of survey respondents did not know:
- Credit scores are used when credit card issuers and mortgage lenders approve applications or determine pricing
- Age and marital status are not considered in credit score calculations
- When they're entitled to a free credit score from their lender
- That payment history - positive or negative - on a joint loan also influences the co-signer's credit score
- That high balances hurt credit scores and that minimizing credit applications helps credit scores
Only 16% of those surveyed said they had excellent knowledge of credit scores and 39% answered that they had good knowledge of credit scores.
1,022 people were surveyed.
Credit Score Resources:
7 Reasons to Pay on Time
The new credit card rules require your credit card bill to be due on the same date every month. This takes some guesswork out of when to send your payment. Knowing the due date won't always make it easier to send your credit card payment, though.
When you're tempted to put off your payment a few days or weeks, think about the consequences - like a lower credit score or late payment fees. Read: 7 Reasons to Make Your Credit Card Payment on Time.
More...
- How to Handle an Accidentally Missed Payment
- Making Your Payment Online
- Tips to Remember Your Due Date
- Monthly Bill Payment Checklist (printable PDF)
Alex Slobodkin / iStockPhoto
Be Smart With Credit Cards While Dating
Few things are as exciting as a new romance. But, as you may know, the euphoria of budding love may be so overwhelming that your decision making is impaired, e.g. you may spend more money dates than you know you can really afford to.
While you're enjoy dating, don't forget to be smart about your finances, particularly your credit. One of the biggest Don'ts of Credit and Dating is not using your credit card to impress the person you're dating. Think about it: is it really that impressive that you're able to borrow money? Will it be as impressive when you're struggling to pay it back? Will the debt make you resent the object of your affection?
The person you're dating may last or they may not last. The credit decisions you make while dating will definitely last. Make sure they're good ones.
Managing Credit & Relationships
Get a Free Credit Score, No Credit Card Required
Offers for free credit scores are all over the internet. Unfortunately, most of these offers are from websites that want you to sign up for a trial subscription to a credit monitoring service.
To get the free score, you have to enter your credit card information and if you forget to cancel the trial, your credit card will be charged. Some people have even reported difficulty canceling these trials and even continuing to be charged after the trial has ended. So the credit scores end up not-so-free. In fact, it can be more expensive than if you simply purchased a credit score.
I've found a few websites that give free credit scores without asking for any credit card information or requiring you sign up for a trial. These sites do recommend certain credit cards, loans, or other services based on your credit score, but you're not in any way obligated to sign up. Check out How to Get a Free Credit Score Without a Credit Card (CreditKarma.com is one of the ways).
Credit Score Articles
Prioritizing Your Debt Payments
You have a stack of bills in front of you and you may not be able to pay them all. Which debts are the most important?
Many people make the mistake of paying their credit cards before their other debts. I argue that credit cards fall very low on the list of debt priorities, especially if you have a mortgage and auto loan. Learn why your mortgage should top your list of debt obligations: How to Prioritize Your Debt Payments
Related Debt Management Reading:
How to Handle Unexpected Expenses
As much as you try, you can't predict every single expense you'll have. But, since we know unexpected expenses will come occasionally, we can set up a savings account known as an emergency fund to pay for these expenses. The key to a useful emergency fund is to set it up ahead of time so the money is there when you need it.
The good thing about an emergency fund is that it keeps you from having to use a credit card or expensive payday loan to cover unexpected expenses. You spend money you already have instead of spending money you'll have to eventually pay back.
If you have to use a credit card to cover an emergency, use a card with the most available credit and the lowest interest rate. Pay back the balance as soon as possible to avoid debt and finance charges.
Recommended Articles
Image: © Steven Puetzer/Getty Images
8 Sample Letters for Creditors, Collectors, and Credit Bureaus
In most cases, it's best to send a letter to a creditor rather than rely on a phone calls. The laws protecting your consumer rights against creditors, debt collectors, and credit bureaus hinge on written communication. So, when you need to dispute a credit card billing error or tell a debt collector to stop calling, put it in writing.
Here are 8 Sample Credit Letters. Make sure you read these tips for sending credit letters for some do's and don'ts about writing to credit businesses.
Use Milestones in Debt Payoff
It's hard to stay motivated paying off your debt. You sacrifice and send payments month after month, but your balances seem to inch down.
Creating milestones in debt plan can keep you from becoming discouraged. Milestones are mini-goals that you'll pass on your way to debt freedom. As you reach a milestone, give yourself a small reward to remind you of the great progress you're making.
Get more details on creating debt milestones.
Use one of these free worksheets to create and track your debt milestones:
- 10% Milestone Worksheet Color | Black & White - Create milestones for every 10% of debt repaid
- Create Your Own Milestones Worksheet Color | Black & White - Fill in your own milestones
Image © Andy Deal / Fotolia.com
Is It Better to Save Money or Pay Off Debt?
Whenever you have debt, there's always a battle between two important financial goals - saving money or paying off debt.
If you save money instead of paying off debt, then you have interest growing on your debt balances and you could enter retirement with credit card debt. On the other hand, if you ignore savings and instead pay off your debt, then you might have to delay retirement until you can save up enough money. So which do you do: do you save money or do you pay off your debt?
Image: © Chris Brignell/iStockPhoto
How to Curb Emotional Credit Card Spending
Do you use your credit card more often when you're sad, angry, or even happy? If you notice yourself using your credit card to buy things you don't need to make yourself feel happy, you may be an emotional spender.
Using your credit card when you're emotional is a big no-no, because you won't stop until you feel better or until you reach your credit limit, whichever comes first. So when you're really down and need a bigger pick-me-up, you're prone to spend more and you could end up in debt. If you think you may have this problem, here are 5 ways to stop emotional spending.