Many years ago it was thought that your credit was your name. In today’s world your credit means much more. It can be the difference between obtaining the home you want, the car you desire, the interest rate you pay, or even how much you pay in insurance premiums.

How do you know if you have good credit?
Generally creditors look at your credit score. Your score tells a creditor the risk they are taking in lending you money. The higher the score, the lower the risk. There are three different credit reporting agencies. Each have a different formula to calculate their score. Even though your score may vary slightly, it should be in the same score range with all agencies. CUA reports your credit history with all three credit reporting agencies; Trans Union, Equifax and Experian.

How can you damage your credit?
By not paying your payments on time. By having too many open lines of revolving credit. By applying for too much credit. By having a large amount of outstanding debt (unpaid balances). By having too little credit. By having too new credit. By purchasing everything on credit without saving for it first. By opening and closing accounts quickly before you establish a payment pattern.

How can you correct your credit?
By paying your payments before they are due but no later than the due date. By choosing 2-3 revolving lines of credit that you use the most and closing out the others. By keeping your credit lines at a level that you can afford to pay (even if your balance is at the credit limit). By choosing creditors wisely, only open the ones that you know you will use and establish a payment pattern with. Keep your revolving debt at 30% of your income or below. By not allowing a creditor to pull a credit report until you are ready to buy.

How do you know what your credit is?
Check your credit report often (once or twice a year). Make sure that all the trade lines (creditor reports) are accurate and that they all belong to you. If you find discrepancies, write a letter to the credit reporting agency and explain why you feel the item is not yours or what information is not accurate. The agency will contact the creditor and give them a time to respond. If the creditor can not prove the accuracy of the report, the item can be removed from your report. If you think you are the victim of an inaccurate credit report, put a 100 word statement on your report explaining what you think is wrong. If your credit score is low, try to determine what is making it low. Debt, inquiries, high balances, open credit lines, collection items, and liens can all bring your score down.

What can you do if you are drowning in debt?
Make a list of all your creditors, the balances you owe them, the payments due each month and how long you have to pay on all of them. Talk to each creditor and see what they suggest to help you. You can also find the closest Consumer Credit Counseling Agency in your area and seek their assistance. Make sure they are a non-profit agency that has a good reputation in the community. They can help you make a plan to reduce your debts and get you out from under the load. Taking the easy way out by declaring Bankruptcy can affect your ability to buy things for 7-10 years.

Why is it important to teach children the value of saving and managing debts?
These suggestions can provide them a good foundation that can help them their entire life. Open savings accounts for them. Encourage them to save a portion of whatever money they receive throughout the year (holiday gifts, birthday presents, allowance). Teach them to save for the important things in life (the new game, the special sports shoes, the bike). Their feeling of accomplishment at having reached the savings goal will be the best gift you can provide to them. Teach them that anything worth having is worth saving for. Open a checking account for them at 16-18 years of age and teach them how to balance the checkbook each month. Consider co-signing for them for their first automobile but make sure they understand the importance of maintaining the payments and the cost involved for insurance, gas etc.