March is National Credit Education Month, which means there is no better time to educate yourself and others on the importance of understanding the in’s and out’s of your credit score! Did you know that one in five Americans find errors on their credit reports and that more than 90% of homeowners and auto insurers use credit scoring to decide who to cover and what premiums to charge? It’s reasons like this that is is extremely important to actively monitor your credit score as well as educate yourself on how to properly manage it!
Celebrate National Credit Education Month the right way, and learn how to manage, build, and improve your credit score!
National Credit Education Month - History
Credit Card Act of 2009
Also known as Credit C.A.R.D., the Credit Card Act of 2009 shut down some malicious practices in the credit card industry and also required credit card companies to be more clear to consumers.
Institution of the Consumer Credit Protection Act
An important governmental regulation was introduced in 1968 that helped protect consumers from unethical credit practices.
Invention of the Term "Credit Rating"
Financial experts invent the concept of "Credit Ratings."
Appearance of the Term "Credit"
In 14th-century London, bankers and financial experts began to utilize the term "credit" to describe loan reliability.
How to Observe National Credit Education Month
1. Check your credit score
It is important to always keep track of your credit! Even when you feel things might be in the clear, your credit can change very quickly; whether it’s a missed payment, frequent credit checks, or an error in your personal or business credit report that does it, credit isn't always stable. This is why keeping on top of your credit score is important for monitoring and managing your overall credit status to make sure everything is in order!
2. Focus on meeting payment deadlines
One of the best ways to either maintain or build good credit is to make all your payments on time. If you are someone who has a bad habit of forgetting to pay bills on time, set up payment reminders to ensure yours have all your bill payments organized. You can also enroll in auto-withdraw with many of your bills, ensuring that you never miss a payment. Continuing to make payments on time will surely positively impact your credit score, and you’ll likely see your credit score increase in no time!
3. Reduce debt
Paying off outstanding balances as soon as possible is another way in which you can drastically improve your credit score. While easier said than done, paying off debts is a great way to see your credit score improve. Even if it's bit by bit, making dents in large amounts of debt is one of the best ways to actively manage and improve your credit. Once your debt is eliminated, or you currently have no debt, make it a priority to remain debt free. This is the best way to ensure a great credit score!
Why National Credit Education Month is Important
A. It shows you how you measure up
Credit scores can be confusing! The best way to understand your credit score is to see how your credit score compares on the spectrum. For instance, the national average personal credit score in the United States is 695. Determining whether your score is above or below might help you to decide how you want to manage your credit in the future!
B. It informs you how to build your credit
If you are just starting out and are new the credit game, National Credit Education Month is the perfect time to start building your credit! There are many different tactics you can use to build your credit, and many institutions have starter programs for young adults and students who want to build their credit. This can include credit cards with a very small balance resulting in low payments or small personal loans. Talk to your credit union or financial institution on how you can start to build your credit today!
C. It encourages you to improve your credit
Your credit score can have a huge impact on your financial life. Good credit is essential for getting manageable interest rates on cars, credit cards, mortgages, and many other financial investments. Knowing how to improve your credit score will prove to be imperative, as a bad score can inhibit you from making many major financial decisions.