Credit Education Month conquer your credit
Credit is often an unknown part of individual’s financial lives and many don’t understand how their credit works. Having a less than stellar credit score can make it difficult to meet financial goals down the road such as obtaining a mortgage for a home or getting new lines of credit. Keeping an eye on your credit is especially important in light of credit agency breaches in the last year. If your information was compromised, it could impact your credit score if a bad actor abuses that information. In light of March’s Credit Education Month, it’s an opportune time to highlight facts to be aware of when it comes to credit and your financial health.
Opening and closing credit cards
If you have one credit card that is a few years old, it’s important to consider why you want to open a new one. Getting a new credit card with the intention of increasing your score isn’t the best option. However, if you find yourself in a position where you need to make a major auto repair, that’s a time to consider opening a retailer credit card if it has a low annual percentage rate (APR).
Closing a credit card won’t typically have an impact on your credit score. However, if closing a credit card significantly decreases your available credit then it can have a negative impact on a credit score. But closing a credit card with little to no balance won’t have a substantial impact.
Negotiating a lower interest rate
If you’ve been with a credit card company for a few years and have consistently paid your bills on time, you can call the company and ask if you can obtain a lower interest rate. With a good track record, they may agree to lower your APR. If you’re still unhappy, you can also consider transferring the credit to another company with a lower interest rate.
Obtaining new lines of credit
Although credit is a big factor when it comes to lending, it’s not all that matters. Interest rates and approval for a car loan or mortgage depend on credit history, income, debt structure and the percentage of income the loan will take up. You can have a great credit score, but if you have high credit card balances and student loans, any additional lending that would max out your funds could cause approval and interest rate issues.
Many credit card companies provide customers with the opportunity to check their score and alert borrowers if their credit score drastically changes. It’s important to be aware of your credit score and strategically find ways to improve it.