The Consumer Financial Protection Bureau says that how you use your credit cards has the most bearing on managing your credit score. The conclusion was one of several in the CFPB's new study of credit reports.
Important for credit
Consumers should certainly focus their spending in an effort to increase credit scores for the next time they need credit. It is not a surprise to most people, and responsible card use is always encouraged.
Richard Cordray, director of the CFPB, said: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."
Charge card corporations 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 brand new retailer charge card application in order to obtain a discount on gift purchases. However, if they do not use that card in a responsible way, such as paying off all charges each month, they could find themselves very 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 rating."
Using it a ton during recession
During the tough economy, customers have had a really hard time with credit cards. They are using charge cards for daily expenses rather than just emergency situations now. In fact, the stagnant wages, high unemployment and increased prices have made it really hard to survive without some form of credit.
Americans should consider listen to the Consumer Financial Protection Bureau because about 40 percent of low- and middle-income families use charge cards to meet daily needs such as rent and clothing, according to the Center for Responsible Lending.
Help from government
One the other hand, many Americans have managed to reduce high charge card balances in the recession's aftermath. Much of that, however, can be attributed to credit 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 right info
With regards to staying informed, Americans are not up to speed. It is very important to keep track of credit, so it does not shock consumers when they apply for a loan and find out there is a massive hit. It is also much easier to take care of any problems and watch for fraud. Less than 20 percent of customers get copies of their credit score though, according to the CFPB. There is certainly room for improvement.
Important for credit
Consumers should certainly focus their spending in an effort to increase credit scores for the next time they need credit. It is not a surprise to most people, and responsible card use is always encouraged.
Richard Cordray, director of the CFPB, said: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."
Charge card corporations 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 brand new retailer charge card application in order to obtain a discount on gift purchases. However, if they do not use that card in a responsible way, such as paying off all charges each month, they could find themselves very 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 rating."
Using it a ton during recession
During the tough economy, customers have had a really hard time with credit cards. They are using charge cards for daily expenses rather than just emergency situations now. In fact, the stagnant wages, high unemployment and increased prices have made it really hard to survive without some form of credit.
Americans should consider listen to the Consumer Financial Protection Bureau because about 40 percent of low- and middle-income families use charge cards to meet daily needs such as rent and clothing, according to the Center for Responsible Lending.
Help from government
One the other hand, many Americans have managed to reduce high charge card balances in the recession's aftermath. Much of that, however, can be attributed to credit 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 right info
With regards to staying informed, Americans are not up to speed. It is very important to keep track of credit, so it does not shock consumers when they apply for a loan and find out there is a massive hit. It is also much easier to take care of any problems and watch for fraud. Less than 20 percent of customers get copies of their credit score though, according to the CFPB. There is certainly room for improvement.
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