The CFPB has released a new study about credit history. It found, among other things, that credit card activity is the single most essential factor analyzed by credit reporting agencies when determining credit worthiness.
Important for credit
Customers 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 many 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."
Charge card companies provide more than half of the data that helps support a credit score.
As long as you are using charge cards responsibly, there is no problem with having them, according to Cordray. He explained that many customers will be getting retailer credit cards to be able to get gift purchase discounts, but the customers should always be careful to pay it off each month. If not, there could turn out to be a black mark on their credit history leading to a higher cost on their mortgage down the road.
No more credit card spending
However, reigning in charge card use has proven not the simplest of tasks for many American customers during the economic downturn. Stagnant wages, high joblessness and rising prices have conspired to force increasingly more Americans into using their charge cards for daily expenditures, and not just for emergencies or occasional splurges.
The Center for Responsible Lending said Wed that around 40 percent of low- and middle-income families routinely use plastic to meet daily needs, such as food, rent and clothing. So apparently the teaching point from the CPFB report is one that Americans would do well to take to heart.
Act to change things
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 charge 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.
Get data and Stay informed
Americans also fall down with regards 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 consumers to identify any reporting errors or incidents of fraud before being blindsided with the news when they go to take out a sizable loan.
Important for credit
Customers 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 many 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."
Charge card companies provide more than half of the data that helps support a credit score.
As long as you are using charge cards responsibly, there is no problem with having them, according to Cordray. He explained that many customers will be getting retailer credit cards to be able to get gift purchase discounts, but the customers should always be careful to pay it off each month. If not, there could turn out to be a black mark on their credit history leading to a higher cost on their mortgage down the road.
No more credit card spending
However, reigning in charge card use has proven not the simplest of tasks for many American customers during the economic downturn. Stagnant wages, high joblessness and rising prices have conspired to force increasingly more Americans into using their charge cards for daily expenditures, and not just for emergencies or occasional splurges.
The Center for Responsible Lending said Wed that around 40 percent of low- and middle-income families routinely use plastic to meet daily needs, such as food, rent and clothing. So apparently the teaching point from the CPFB report is one that Americans would do well to take to heart.
Act to change things
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 charge 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.
Get data and Stay informed
Americans also fall down with regards 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 consumers 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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