The Consumer Financial Protection Bureau states that how you use your charge cards has the most effect on determining your credit score. The conclusion was one of several in the CFPB's new study of credit reports.
Responsible charge card use outlined
Customers should certainly focus their spending in an effort to increase credit scores for the next time they need credit. It is not a shock to a lot of people, and responsible card use is always encouraged.
Consumer Financial Protection Bureau director Richard Cordray said: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."
According to the Consumer Financial Protection Bureau report, more than half of the data on the typical credit score report comes from credit card businesses.
It is easy to fall into a debt spiral when customers use credit cards irresponsibly. When customers go to take out a mortgage in the future, they might end up having to pay a lot more due to the black mark on their record, according to Cordray. He explained that many consumers will be getting retailer charge cards during the season to get discounts on gift purchases, which is perfectly alright as long as the card is used responsible.
Using it a ton during recession
However, reigning in credit card use has proven not the easiest of tasks for many American customers during the economic depression. Stagnant wages, high unemployment and rising costs have conspired to force increasingly more Americans into using their charge cards for daily expenses, and not just for emergency situations or occasional splurges.
The CRL 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 evidently the teaching point from the CPFB report is one that Americans would do well to take to heart.
Help from government
One the other hand, many Americans have managed to reduce high credit card balances in the recession's aftermath. Much of that, however, can be attributed to credit card reforms, say some analysts. The Charge card Accountability Responsibility and Disclosure Act of 2009 eliminated or restricted many predatory lending practices, such as high penalties and fuzzy fee structures.
Important to Stay informed
Americans also fall down when it comes to staying informed of their credit standing. According to the CFPB, less than 20 percent of customers bother to obtain copies of their credit report. Frequent monitoring of credit reports allows customers to identify any reporting errors or incidents of fraud before being blindsided with the news when they go to take out a sizable loan.
Responsible charge card use outlined
Customers should certainly focus their spending in an effort to increase credit scores for the next time they need credit. It is not a shock to a lot of people, and responsible card use is always encouraged.
Consumer Financial Protection Bureau director Richard Cordray said: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."
According to the Consumer Financial Protection Bureau report, more than half of the data on the typical credit score report comes from credit card businesses.
It is easy to fall into a debt spiral when customers use credit cards irresponsibly. When customers go to take out a mortgage in the future, they might end up having to pay a lot more due to the black mark on their record, according to Cordray. He explained that many consumers will be getting retailer charge cards during the season to get discounts on gift purchases, which is perfectly alright as long as the card is used responsible.
Using it a ton during recession
However, reigning in credit card use has proven not the easiest of tasks for many American customers during the economic depression. Stagnant wages, high unemployment and rising costs have conspired to force increasingly more Americans into using their charge cards for daily expenses, and not just for emergency situations or occasional splurges.
The CRL 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 evidently the teaching point from the CPFB report is one that Americans would do well to take to heart.
Help from government
One the other hand, many Americans have managed to reduce high credit card balances in the recession's aftermath. Much of that, however, can be attributed to credit card reforms, say some analysts. The Charge card Accountability Responsibility and Disclosure Act of 2009 eliminated or restricted many predatory lending practices, such as high penalties and fuzzy fee structures.
Important to Stay informed
Americans also fall down when it comes to staying informed of their credit standing. According to the CFPB, less than 20 percent of customers bother to obtain copies of their credit report. Frequent monitoring of credit reports allows customers to identify any reporting errors or incidents of fraud before being blindsided with the news when they go to take out a sizable loan.
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