Living Credit Smart in Tough Financial Times

(ARA) – Amid uncertain economic times, the state of consumers’ credit and debt management is often referenced as an indication of Americans’ overall financial well-being. Credit scores enable lenders to evaluate the level of risk involved in extending credit to a consumer and they can affect everything from your ability to open a credit card to determining your rates when buying a home or car. As our nation struggles to regain its footing in a recession, establishing good credit has never been more important than it is today.

Experian, the leading global services information company, conducted a second annual assessment of credit scores in cities across the country and found that many cities have improved their scores since last year – albeit by small margins. With the average U.S. credit score at 749, or a “C” rating based on the VantageScore 501-990 scoring range, many consumers are taking small steps toward improving their economic situation, but there is still a great deal of room for improvement.

Maxine Sweet, vice president of public education at Experian, the leading global services information company, offers some tips to help consumers take proactive steps to help improve their credit and make smarter financial choices.

Check your credit score and report so you have a benchmark for improvement.
Credit scores translate the information in your credit report into a simple number. Check your credit report and purchase a credit score so you understand the baseline of where you stand and how your credit may have been affected by recent life events.

Understand the financial behaviors that influence the information contained in your credit report.
While it is important to know where your credit scores fall in the range of risk for lenders, the most important things to understand are the factors in your credit report that determine that risk. Once you understand the way your credit report is affected by your financial behaviors, you will be able to take the necessary steps to improve your credit history and subsequently improve your scores.

Pay your bills on time.
Paying your bills on time is the single most important contributor to good credit. Late payments negatively affect your ability to get credit since they indicate a stronger likelihood that you will make late payments again or will be unable to pay your debts in the future. Even if the debt you owe is a small amount, it is crucial that you make payments on time.

Keep balances low on credit cards and other revolving credit.
If you max out your credit card or charge balances that are very close to your limit, you will increase your “balance to limit ratio,” or utilization ratio. A high utilization ratio may indicate that you are tempted to charge more than you can pay and therefore, negatively affect your credit score.

Remember there is no overnight fix for a low credit score.
A credit score reflects credit payment patterns over time, with more emphasis on recent information. The fastest way to see an improvement in your score is to catch up on late payments and pay down your debts. If you have negative information on your credit report, time is your ally in improving your credit score.

Understanding how your financial behaviors influence your credit score will allow you to make more informed financial decisions and, ultimately, improve your financial future. To learn more about building and maintaining a strong credit history visit

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