The Consumer Financial Protection Bureau has released a brand new study about credit reports. It found, among other things, that credit card activity is the single most essential factor examined by credit reporting agencies when determining credit worthiness.
Responsible credit card use highlighted
That most likely isn't really surprising to many people. However, it does spotlight where customers should concentrate their efforts to be able to keep credit scores high for the next time they have to purchase a vehicle or want to take out a mortgage.
CFPB director Richard Cordray said: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."
Charge card businesses provide more than half of the data that helps support a credit score.
Cordray said that during the holiday season some consumers may be tempted to fill out a new retailer credit card application in order to receive a discount on gift purchases. However, if they do not use that card in a responsible way, such as paying down all charges each month, they could find themselves easily falling into a debt spiral. He said, "it could end up costing a lot more down the line when they go take out a mortgage and that credit card is a black mark on their credit score."
Not simple to stop spending
With the economy still not up to speed, there are a ton of issues with money. There is high unemployment, stagnant wages, increased prices and more. That means many customers are using credit cards for daily expenditures rather than just for emergencies. American customers have not been able to stop during the tough economy.
The Center for Responsible Lending said Wednesday 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.
Guarding consumers with the Charge card Act
One the other hand, many Americans have managed to lower high charge card balances in the recession's aftermath. Much of that, however, could be attributed to charge card reforms, say some analysts. The Credit card Accountability Responsibility and Disclosure Act of 2009 eliminated or restricted many predatory lending practices, such as high penalties and fuzzy fee structures.
Stay informed with all the correct info
When it comes to staying informed, Americans are not up to speed. It is important to keep track of credit, so it does not surprise customers when they apply for a loan and find out there is a huge hit. It is also much easier to look after any issues and watch for fraud. Less than 20 percent of customers get copies of their credit score though, according to the Consumer Financial Protection Bureau. There is definitely room for improvement.
Responsible credit card use highlighted
That most likely isn't really surprising to many people. However, it does spotlight where customers should concentrate their efforts to be able to keep credit scores high for the next time they have to purchase a vehicle or want to take out a mortgage.
CFPB director Richard Cordray said: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."
Charge card businesses provide more than half of the data that helps support a credit score.
Cordray said that during the holiday season some consumers may be tempted to fill out a new retailer credit card application in order to receive a discount on gift purchases. However, if they do not use that card in a responsible way, such as paying down all charges each month, they could find themselves easily falling into a debt spiral. He said, "it could end up costing a lot more down the line when they go take out a mortgage and that credit card is a black mark on their credit score."
Not simple to stop spending
With the economy still not up to speed, there are a ton of issues with money. There is high unemployment, stagnant wages, increased prices and more. That means many customers are using credit cards for daily expenditures rather than just for emergencies. American customers have not been able to stop during the tough economy.
The Center for Responsible Lending said Wednesday 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.
Guarding consumers with the Charge card Act
One the other hand, many Americans have managed to lower high charge card balances in the recession's aftermath. Much of that, however, could be attributed to charge card reforms, say some analysts. The Credit card Accountability Responsibility and Disclosure Act of 2009 eliminated or restricted many predatory lending practices, such as high penalties and fuzzy fee structures.
Stay informed with all the correct info
When it comes to staying informed, Americans are not up to speed. It is important to keep track of credit, so it does not surprise customers when they apply for a loan and find out there is a huge hit. It is also much easier to look after any issues and watch for fraud. Less than 20 percent of customers get copies of their credit score though, according to the Consumer Financial Protection Bureau. There is definitely room for improvement.
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