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Forming financial habits is never easy; sometimes we need a little motivation. There are new changes coming to the credit industry, and if you’re a renter, a stay-at-home parent, or a frustrated banking customer, you might want to pay attention.
Instead of letting these changes get the best of you, make some positive changes of your own now for a happier credit life later.
Paying your rent on time is something you should always do, but soon your credit could be dinged if you don’t.
Experian, one of the big three credit bureaus, began including rental payment data on consumer credit reports in January. For now, Experian is only reporting positive rental payment data, which means if you’re paying your rent on time, the data can actually help your credit score. This is especially good news for consumers with little credit history, and will help positively build their credit.
But, Experian is planning to add in negative rental payment data by next year. Reported on your credit report, it could drag your score down and lenders may consider your late rental payments as a red flag of your creditworthiness.
What to do: If you’ve had trouble getting your rent check in on time in the past, start changing your bad habits now before one late rent check blemishes your credit report and credit score. Make it easy on yourself. Set up an automatic payment through your bank to ensure your rent payment is on time. Prioritize your rent payment first in your budget so you always have enough set aside.
Due to some new clarifications on credit card regulations, stay-at-home moms and dads will soon have a harder time getting approved for their own credit cards.
Effective October 1, a new amendment requires credit card issuers to consider individual income or salary, not household income, when assessing an individual’s ability to repay debt. For stay at home spouses with no individual income to report, this could jeopardize their ability to get their own credit card.
What to do: If you are a stay at home spouse, start establishing credit now. As of right now, you can still report household income on credit card applications to get your own credit card. After the amendment takes place, you may find it harder to qualify since you may lack individual income to report.
Find a credit card that suits you, apply, and start using credit responsibly. Make sure to keep your credit utilization under 30% to build great credit now and better your chances for future financial opportunities.
Forget to read the fine print now and then? You may start seeing unexpected charges and fees if you don’t.
With more credit industry regulations restricting fees on credit cards, banks are recouping their losses with fees tied to other banking activities, like your checking or savings account. Watch out for checking account fees, higher minimum balances on savings accounts, or debit card transactions capped at $100 or as little as $50, to name a few. If you use ATMs outside of your bank, you may start to see higher fees. For example, Chase, which usually charges $3 for non-customer withdrawals, is now testing out $5 fees for non-customers.
What to do: Read the fine print, and be weary of these impending changes.
Or join a credit union. With some credit card interest rates soaring over 20%, the under-10% rate that many credit unions offer is appealing; not to mention the fact that some credit unions reimburse you for ATM fees. While banks are trying to please shareholders by increasing profit margins, credit unions are member-owned and not-for-profit. If your banks fees are getting out of hand, consider switching to a credit union.
Bottom line: Always keep in touch with what’s going on in the world of credit and banking. Start taking active steps to adopt good credit habits and side-step the pitfalls. You never know when a new regulation or fee could affect your credit health, so start now to better your credit later.
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