March is National Credit Education Month – The Greenville Advocate
by Aisling Fields
For many people, credit is a scary thing to think about. It’s mainly because they don’t always understand it. National Credit Education Month is the perfect time to learn more about the ins and outs of credit.
“Understanding what credit is, how it works, and the impact it can have on you now and in the future is an important step in becoming financially fit.” said Emily Hines, regional humanities officer for the Alabama Cooperative Extension System.
A person’s credit is based on a score between 300 and 850. This score lets a potential lender know if someone is credit worthy. Scores are based on credit history, which is affected by a number of things. These elements include the number of open accounts, debt levels, payment history, etc.
The higher the score, the more likely a person is to get a loan. Indeed, credit scores are used to determine whether someone is likely to repay a loan on time.
There are many things a credit score is needed for, like buying a car, saving on insurance, or buying a house. To do all of these things, many people need to take out a loan from places like a bank or a credit company.
It is important to understand what builds or rebuilds credit, as well as what harms it. Many people don’t realize how easy it is to build credit if done correctly.
“Making your payments on time as agreed and keeping your balances low will have a positive impact on your credit,” Hines said.
When starting to build credit, it may be in a person’s best interest to start small and open a single credit card. Try putting small amounts on this card, like gasoline, once a month. Remember to keep a low balance and always pay it off on time. Doing these articles is a big step in the right direction.
Just as people can build their credit, they can hurt it even faster. Credit can be most affected by non-payment of scheduled payments. Whenever a loan is not repaid at the agreed rate and time, there is a risk of credit damage.
“If you want to learn more about your credit, Extension’s Financial Resource Management and Workforce Development team offers financial education classes throughout Alabama,” Hines said.
The Regional Extension Officer in your area can help you enroll in these educational courses. More information on credit is also available in the publications Alabama Extension How to Build or Repair Credit and Credit Report versus Credit Score.