SPONSORED CONTENT: The next time you purchase things like groceries, movie tickets or gas, you will likely have several different payment options. Using your credit card can have several benefits as long as you use it responsibly.
FRAUD/UNAUTHORIZED USE PROTECTION
Most major credit companies, including SECU, provide zero-liability coverage when your account is used fraudulently for unauthorized purchases. In addition, SECU and many companies also monitor for potentially fraudulent purchases and will decline a transaction they suspect is not legitimate. This protection means it is safer to carry cards than cash that is easily lost, stolen or misplaced.
Even debit cards pose some risks over credit cards, as money is taken directly from your checking account. Many banks and credit unions will work with you to replace the stolen funds, but that process can take time, leaving you without access to that cash.
BUILD CREDIT
Using your credit card may help you build additional credit, especially if you have limited history or a low credit score. Keep in mind you don’t have to spend a lot or go into deep debt on your cards to raise your credit score. Make small purchases for which you normally would use cash or debit, and then pay the total bill when your statement arrives. Making timely payments on any credit account is one of the most important elements of your credit score.
TIPS FOR USING YOUR CREDIT RESPONSIBLY
Don’t spend more than you can afford to pay back in cash. Carrying a balance on credit accounts accrues interest, which adds to the amount you owe. If you pay your account in full each month, you avoid paying any interest while reaping the benefits of using credit.
Do make your payments on time. As mentioned above, the credit bureaus consider this one of the most important factors impacting your credit score.
Don’t use a credit card if you are already carrying a balance or struggling to manage your payments. Adding more debt on top of what you already owe just makes it worse. Stick to paying with cash to avoid overspending and focus on paying down your debt first.
Watch out for hidden “convenience” fees. Sometimes using a credit card to pay for things like utilities and other services can accrue an extra fee. Make sure to read and understand the fine print before you use your credit card in these instances.
SECU Visa® Credit Cards offer a low rate and more additional benefits and options are on the way for SECU credit card holders. State Employees’ Credit Union – Visa Credit Cards (ncsecu.org)
If you have questions about your credit and using it wisely, please visit your local SECU branch or contact our 24/7 Member Services at 888.732.8562.
SPONSORED CONTENT: What Is Your Credit Score and Why You Should Care
Your credit score is more than just a random number. Establishing a good credit history and score can be very helpful for you and your family. Good credit makes it easier to finance major expenses, such as a home or car, and important life events such as college tuition, weddings and so much more. However, building and maintaining good credit requires healthy habits and good financial choices.
WHAT DO YOU NEED TO KNOW ABOUT CREDIT?
You are establishing credit when you obtain a loan from a lender today that you promise to pay back in the future. Using credit is one way to buy things you might not otherwise be able to buy, especially those important purchases and investments mentioned above.
Lenders are more willing to extend credit to people who are more likely to pay back the loan than those who are less likely to repay the debt. Therefore, it’s important to establish a positive credit history because in addition to allowing you to obtain loans, credit history can also be used in other instances, such as when you are setting up a new insurance policy or utility service. Many companies will evaluate your credit history to help assess your overall risk and ability to pay for their services.
Your credit score is a three-digit number that is a prediction of your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit reports. A higher score reflects less risk, which may make you more attractive to lenders. A lower score reflects more risk, which may result in being denied a loan or charged a higher interest rate1. The most common scoring model is the FICO® score, which typically ranges from 300 to 850.
While each factor impacts your score a little differently, the primary factors that generally affect your score include1:
Payment history
The amount of debt you owe
How long you’ve been using credit
New or recent credit
Types of credit used Your score may change as you open loan or credit card accounts, utilize those accounts and make payments on those accounts.
The third fact to know about credit is that you also have a credit report in addition to your score. Your credit report is a statement that has information about your credit activity and current credit situation, such as loan paying history and the status of your credit accounts. It often contains personal information, like your name, address, date of birth and Social Security number, as well as information about your credit accounts, including current and historical credit accounts, the credit limit or amount, the account balance, account payment history, and the name of the creditor. Your credit report may also include public records like tax liens, collections, bankruptcies and foreclosures for as many as seven to 10 years.
Independent credit bureaus such as Experian, TransUnion and Equifax create and keep credit reports on file.
It’s a good idea to check your credit report occasionally and correct any errors as soon as possible. You are entitled to receive a free copy of your credit report from each of the three major credit bureaus once every 12 months. Request your free credit report online from annualcreditreport.comor call 877.322.8228. You will need to verify your identity with your name, birth date, address and Social Security number.
If your report contains any mistakes or inaccurate information, contact the company or lender reporting the information first. If you are unable to resolve the issue with the company or lender, you can also dispute the information with the credit bureau(s) furnishing the report. Be sure to include as much documentation as possible to support your claim.
But, if you do have a negative item on your credit report that was reported correctly, there are no instant solutions! Be wary of companies who claim they can “fix” or “remove” a correctly reported negative item from your report for a fee, as creditors and furnishers are required to report accurate information. If the information is incorrect, the creditor or furnisher is required by law to remove or correct the information based on your dispute of the information reported. So you shouldn’t have to pay a third party to fix or remove items that are incorrect on your credit report.
BEST PRACTICES FOR ESTABLISHING & MAINTAINING GOOD CREDIT2
The Federal Home Loan Mortgage Corporation, known as Freddie Mac, suggests the following specific behaviors to build and maintain a good credit history:
On-time payments
Keeping debt load manageable
Using as little of your credit limit as possible
Paying the entire amount due, or at least more than the minimum amount due
Reviewing credit reports annually
Not shopping for too much credit
If you want to improve your score, in addition to leveraging the suggestions above, Freddie Mac provides the following tips:
Pay your credit card bill in full if you can.
Don’t charge more than you can afford to pay back.
Use a small percentage of your credit limit.
Keep only a few credit cards or credit accounts open.
Pay down debts.
Open and keep credit accounts in your name to establish good credit history.
Dispute inaccuracies in your credit report.
If you need to build or rebuild credit, be patient. The best practice is to review your credit regularly and manage your credit wisely over time.
SECU offers various services to our members to help them meet their financial goals. If you have any questions or want to learn more about how we can fulfill your specific needs, Member Services Support is available at 888.732.8562, or please visit us in person at your local branch Monday through Friday, 8:30am to 5:30pm.
If you need to build or rebuild credit, be patient. The best practice is to review your credit regularly and manage your credit wisely over time.
1 Visa. Practical money guide: credit history. (2018). Retrieved from practicalmoneyskills.com 2 Get smart about credit: Credit basics Q&A. My Home by Freddie Mac. (2021, July 21). Retrieved from myhome.freddiemac.com
