Dos and Don’ts of Credit

DO

DO know the power of credit. Lenders look at your credit history as an indication of your future financial behavior. By using credit wisely, you can build a good credit history — which may make it easier to get loans with low interest rates, rent an apartment, or purchase a car or home.

DO
read the fine print on the credit application. The application is a contract, so read it carefully before signing. Interest rates, credit limits, grace periods, annual fees, terms and conditions may vary.

DO pay at least the minimum due for each credit contract you’ve obtained, and contact your creditor if you have trouble making payments. This will help you avoid late fees. To pay off your balance quicker, pay more than the minimum due. If you are unable to make the minimum monthly payments, let your creditor know so they can work with you to create a more manageable payment plan.

DO
be wary of anyone who claims they can “fix” your credit report. No one can legally remove negative accurate information from your credit history. The only thing that can fix a credit report is time and a positive payment history.

DO order a copy of your credit report annually. You have the right to know what is in your credit report. The Fair Credit Reporting Act requires each of the three major credit bureaus to provide you with a free copy of your credit report at your request each year. Lenders evaluate you as a borrower based on your credit, and your credit report needs to be accurate.

DON’T

DON’T feel pressure to get a credit card. If you don’t want one, you have the right to say “no.” Under the new CARD Act 2009, consumers age 18-21 cannot be solicited for credit. If you no longer wish to receive prescreened offers, opt out by calling 1-888-5-OPTOUT (1-888-567-8688).

DON’T pay your bills late. Late payments can affect your credit rating and increase your balance, and you may incur additional fees. If you are unable to pay the minimum monthly payment, let your creditor know and they may be able to lower your payments.

DON’T spend more than you can afford. Credit is a loan and has to be repaid. It is your responsibility to manage your debts and to keep your commitment with lenders. Avoid reaching your credit limit or “maxing out” your cards.

DON’T ignore the warning signs of credit trouble. If you pay only the minimum balance, pay late, use cash-advances to fund daily living expenses or transfer a lot of balances, you might be in the “credit” danger zone. Talk to a financial counseling organization to regain control of your finances.

DON’T share your credit card number. Never give out credit card or personal information if you have not initiated the transaction. Be aware of identity theft and phishing scams that ask for credit card numbers. If you suspect that your identity has been compromised, file a complaint with the Federal Trade Commission by calling 1-877-ID-THEFT (1-877-438-4338); TDD: 202-326-2502.

These money-saving tips are provided by Iowa State Bank in partnership with the Iowa Bankers Association. If you have specific questions, contact your local banker at Iowa State Bank. Iowa State Bank is an Equal Opportunity Lender. Member FDIC.

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