December 16th 2024.
In many countries, having a good credit score may not hold much significance, but in the United States, it is highly valued. It can open doors to loans for major purchases like homes and vehicles and may even be a requirement for renting apartments. So, it's safe to say that credit is king in the U.S.
A recent report by FICO, a credit scoring company, revealed that the average credit score in the U.S. is 717. While this may seem like a decent number, considering the maximum score is 850, it's alarming to see that many Americans are falling into habits that could potentially harm their financial well-being in the long run. Christian Widhalm, the CEO of Bloom Credit, shared some valuable insights with The Street on how to effectively manage your credit.
One of the biggest mistakes people make when it comes to credit is making late payments. And with inflation on the rise, missed and late payments are becoming increasingly common. According to FICO, in 2023 alone, 18% of the population had at least one credit account with a past-due payment of 30 days or more. To improve your credit score, it's crucial to prioritize timely bill payments, especially when inflation is high.
Widhalm emphasizes the importance of maintaining a positive repayment history. He explains, "One of the key factors for a good credit score is having a positive repayment history. It takes time to build, but you can start by showing that you are becoming more responsible with your payments." Repairing credit that has been damaged due to years of mismanagement requires patience and consistency, but establishing credit can be a much smoother process.
Surprisingly, having a checking account can greatly impact your credit score. Widhalm shares, "You can actually report 24 months of your checking account history almost immediately. This means you can establish a positive payment history in a shorter amount of time, which can significantly improve your credit score." In fact, this is the approach taken by The Credit Bros, who aim to help Black people repair their credit and achieve homeownership.
In conclusion, good credit is crucial in the U.S. and should not be taken lightly. By prioritizing timely payments and establishing a positive repayment history, individuals can improve their credit scores and secure better financial opportunities.
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