Finances FYI Presented by JPMorgan Chase
By Aaron Allen, The Portland Medium
Your credit score and the strength of your score plays an essential role in navigating the world that we live in today. Credit, in many ways, can affect your quality of life and provide a pathway towards life-changing opportunities like starting or expanding a business.
Building or rebuilding credit takes time, but the long-term benefits are invaluable. A solid credit history helps build generational wealth, enables home purchases, and stabilizes financial capacity. Lenders rely on credit scores to assess borrower reliability, and a high credit score can qualify you for lower loan interest rates, ultimately saving you money over time.
“A good credit score is crucial for a healthy financial future,” says Quincy Crawford, Branch Manager for JPMorgan Chase. “Strong credit makes it easier to secure a car loan, mortgage, apartment, or even certain jobs. Lenders use credit scores to gauge borrower reliability, and a high credit score can qualify you for lower loan interest rates, leading to long-term savings. While building credit or improving your credit score has no shortcuts, there are five steps to simplify the process.”
There’s no easy pathway to building your credit or improving your current score, but you can help make the process much smoother with less bumps in the road. According to Crawford, there are a few steps that can assist you in your journey to build and/or rebuild your credit:
Find out your current credit score
“For most adults, you can obtain your credit score by requesting it and carefully reviewing it,” says Crawford. “Resources like AnnualCreditReport.com and Chase Credit Journey offered by Chase can help you manage your credit.”
Apply for a credit card
“Credit cards can expedite the credit-building process if used responsibly,” explains Crawford. “Since credit card activity is reported to credit agencies, responsible use can significantly aid in building credit. Student and other credit cards for individuals new to credit are good options for building credit. Establishing a credit score and history requires keeping an account open for at least six months, so be patient and practice healthy credit habits.”
Address debt impacting your score
“It’s expected to have some debt, but significant credit card debt and missed loan payments can heavily impact your credit score,” cautions Crawford. “Pay bills on time and avoid overspending. Maxing out a credit card or approaching your limit will lower your score. If rebuilding credit, pay down as much debt as possible and catch up on past-due bills. Be cautious about seeking new lines of credit while carrying significant debt, as lenders may perceive it as a risk, leading to a drop in your score.”
Practice good financial habits in other areas
“Establishing savings and checking accounts, renting an apartment, and paying utility and other bills on time showcase fiscal responsibility to lenders,” suggests Crawford. “Although these actions may not directly affect your credit score, they demonstrate positive practices that lenders notice when evaluating applications for car loans, mortgages, or other major life goals.”
Help your children build credit
“Opening checking and savings accounts for your children teaches them essential financial skills, from depositing paychecks to managing bill payments – the fundamental building blocks of financial infrastructure,” explains Crawford. “Consider making your teenager an authorized user on your credit card account to help them establish their own positive credit history. Adopt this approach if you consistently pay your credit card bill in full and on time, as late payments can impact your child’s credit report and your own.”
Exercise patience and adopt a long-term approach
“Lastly, building and rebuilding credit requires time and patience,” assures Crawford. “For instance, purchasing a home can contribute to generational wealth with a strong credit score. It also fosters long-term financial stability for you and your family as you work towards your financial goals.”
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
