Credit cards given most weight in credit rating determination
The CFPB says that how you use your charge cards has the most effect on managing your credit score. The conclusion was one of many in the CFPB's new study of credit reports. Article resource:
Always responsible use of cards
That most likely is not surprising to most people. However, it does spotlight where consumers should concentrate their efforts to be able to keep <a href="http://personalmoneynetwork.com/moneyblog/2012/11/02/free-things-you-should-be-getting/">credit scores</a> high for the next time they have to buy an automobile or want to take out a mortgage.
Richard Cordray, director of the Consumer Financial Protection Bureau, said: “Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way.”
According to the Consumer Financial Protection Bureau report, more than half of the data on the typical credit score report comes from charge card businesses.
It is simple to fall into a debt spiral when consumers use credit cards irresponsibly. When consumers go to take out a mortgage in the future, they might end up having to pay a lot more because of the black mark on their record, according to Cordray. He explained that many consumers will be getting retailer credit cards during the season to get discounts on gift purchases, which is perfectly alright as long as the card is used responsible.
<strong>Recession and credit card use</strong>
During the economic downturn, consumers have had a really hard time with credit cards. They are using charge cards for daily expenditures rather than just emergencies now. In fact, the stagnant wages, high joblessness and increased prices have made it really hard to survive without some form of credit.
The CRL said Wed that around 40 percent of low- and middle-income families routinely use plastic to meet daily needs, such as food, rent and clothing. So apparently the teaching point from the CPFB report is one that Americans would do well to take to heart.
<strong>Exploring the Credit card Act</strong>
Due to the Credit card Accountability Responsibility and Disclosure Act of 2009, many customers have been able to cut back high credit card balances during the recession. The Act has made it extremely hard to have additional high penalties and fee structures that do not make any sense. The reform has been helping many customers.
<strong><a href="https://personalmoneynetwork.com/personal-loans/">Stay informed</a></strong>
Less than 20 percent of customers actually get their credit report regularly, according to the CFPB. Consumers can point out errors or fraud more very easily and fix any issues before it shows up when applying for a large loan if they are keeping track of their credit. Americans are definitely not doing enough when it comes to staying informed.
<a href="http://articles.washingtonpost.com/2012-12-13/business/35789884_1_credit-card-average-credit-credit-scores">Washington Post</a>
<a href="http://www.dailyfinance.com/2012/12/17/new-study-reveals-the-most-important-item-in-your-credit-report/">Daily Finance</a>
<a href="http://www.foxbusiness.com/personal-finance/2012/12/14/cfpb-issues-credit-report-study/">Fox Business</a>
This looks like spam and has been reported.
Agreed and reported