[Editor’s note: Although this is not sponsored content, it is authored by Rod Griffin, the Senior Director of Public Education and Advocacy for Experian]
Inflation and rising prices are certainly on many people’s minds today. As we have witnessed, you never know when the economy will change, or we’ll face a societal issue like the pandemic that makes it tougher on our pocketbooks. That is why it’s very important to plan ahead financially.
There are several steps you can take to set yourself up for financial success such as creating a budget, saving regularly, putting away money for retirement, and regularly evaluating expenses to cut costs. There is one more aspect to finances that should be considered, which is the importance of establishing a credit report and maintaining a good credit score.
Become credit visible and obtain more financial opportunities
If you haven’t ever used credit such as buying goods with a credit card or applied for a car loan, you probably don’t have a credit report in your name with the three national credit reporting agencies. A credit report is a record of how you have used credit in the past, including how much debt you have, how long you have been managing credit accounts and whether you have paid your bills on time. Your credit report includes things like a list of your credit accounts such as credit cards, auto loans, and mortgages. It also includes unpaid accounts that have gone to collections, bankruptcy filings, and car repossessions. The data within your credit report affects your credit score, which is a number usually between 300-850. The higher the number, the better your possibility to be granted credit and with better terms.
You may prefer to pay for goods and bills in cash or check, but you could need credit for an unexpected expense or an emergency. When you do apply for credit, the lender will check if you have a credit report and use a credit score to evaluate your creditworthiness. If you do not have a credit report at all, the lender may charge higher interest rates, add additional fees or not grant you credit. The lack of a credit report can even negatively affect other parts of your life such as renting a home or apartment.
How to get started on your credit journey
We know the topic of credit is important to the Hispanic community. In a recent national survey by Experian, 57 percent of Hispanics agreed that credit is necessary to get the things they want in life. Yet 32 percent said they have no credit in their name and 25 percent said that credit is confusing. Experian’s mission is to help achieve financial power for all and the first step is equipping those who need it most with the financial resources and credit education to lead healthy financial lives.
This is one reason why we launched a free program called Experian Go™ to help you get started. You can set up a free account and generate your credit report at Experian in minutes. For more information, visit Experian.com/go (only available in English).
There are different ways to consider using credit to build up your score after establishing your credit report. One way to add credit history without taking on debt is by adding your positive payments for utility, telecom and video streaming bills to your Experian credit report using a free tool called Experian Boost™. Over time as you pay these bills, the payment history will continue to positively impact your profile.
Whatever path you choose to build your credit score, make sure to always make payments on time, keep your credit card balances as low as possible — ideally pay them in full each month — and check your credit report often so you know what is in your credit history, that the information is accurate and there is no sign of identity theft.
Lastly, there are many free tools online and apps available that can help you learn more about credit and manage your finances. Take advantage of these resources and get started today. If you invest the time now, your knowledge and great credit score will help you down the road should you ever need to use credit as an additional financial resource.