Today Is the Day To Get Smart About Credit

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Today is National #GetSmartAboutCreditDay. Originated by the American Bankers Association Foundation in 2003, the goal of the day is to promote awareness of the importance of credit and the role it plays in all of our lives. Volunteer bankers work with students and young adults all over the country to provide basic knowledge about what it takes to have good credit and how to manage personal finances responsibly, and many other organizations have joined them.

Experian supports the effort to equip consumers with the knowledge to use credit as a tool to help achieve their financial goals and maintain good financial health. Whether you are establishing credit for the first time, or are working to improve your credit scores, here are 10 steps you can take to be successful in managing your finances wisely and building a positive credit history:

  1. Open a credit card account. If you don't already have one, opening a credit card account or two can be beneficial. Because you choose how much to charge each month and how much to repay, lenders view how you manage credit cards as a key indicator of how well you manage your finances and how likely you are to repay debts on time. Using a credit card to make a small purchase or two each month and then paying your balance in full can help improve your credit scores a bit more quickly without taking on debt.
  2. Make all your payments on time. Your payment history is the most important factor in your credit scores. Even one missed payment can impact them substantially. Consider setting up automated bill payments to help make sure you never miss a due date.
  3. Keep your credit card balances low. Your utilization ratio is the next most important factor after your payment history. Utilization is calculated by taking the total of your credit card balances divided by the total of your credit card limits. The lower your utilization ratio, the better for your credit scores.
  4. Don't charge more than you can afford to repay. Ideally, you should limit credit card purchases to only what you can afford to pay off each month. Paying your balance in full each month keeps you from accumulating revolving debt, helps you avoid interest charges, and shows lenders that you can manage debt wisely.
  5. Make a budget. Having a budget can help you stay on top of your finances by letting you have a clearer picture of where your money is going every month. It can also help you see where expenses can be trimmed in order to allow for more money to be diverted to savings accounts and paying off any outstanding debts.
  6. Set up an emergency fund. While not directly related to credit, having an emergency fund can have a big impact on protecting your credit rating by enabling you to continue making on-time payments when the unexpected happens, such as illness or job loss.
  7. Don't borrow more than you comfortably afford. When opening a home or auto loan, it may not be wise to borrow the full amount you are approved for. The more you borrow, the higher monthly payments will be, and only you know if you can truly afford those payments comfortably. As a general rule, it's always best to leave some wiggle room in your budget.
  8. Think twice before you cosign or open a joint account. Many people don't realize that when you cosign for a loan or open a joint credit account, you are equally responsible for the debt. Even if you are not the one who is making payments or charges on the account, any missed payments, high balances or default will impact you as well as the other signer.
  9. Ask about having rent payments reported. If you are renting, talk to your landlord or leasing company. Your lender can report your positive payment history to Experian.
  10. Sign up for Experian Boost . You can get credit for your positive utility, cellphone, and streaming service payments by having them added to your Experian credit report.

As part of our ongoing commitment to help consumers gain the knowledge they need to build strong credit and create a better financial future for themselves and their families, Experian is always looking for ways to engage with consumers. Among other things, we maintain a credit advice blog online called Ask Experian, where we answer frequent consumer questions and address various credit and financial topics. Experian also hosts a weekly #CreditChat on Twitter and has #CreditChatLive channel on YouTube.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April 2022 at AnnualCreditReport.