Sunday, April 13, 2014

Credit Report Study By CFPB Singles Out Credit Cards

By Cornelius Nunev


The CFPB has launched a new study on credit reports that determine a consumers' capability to get credit. According to the report, how a consumer utilizes his or her charge card is the most telling factor in deciding on a score.

Using cards sensibly

Customers should certainly focus their spending in an effort to increase credit scores for the next time they need credit. It is not a shock to many people, and responsible card use is always encouraged.

Richard Cordray is the CFPB director. He explained: "Credit cards are given great weight in credit profiles -- a lesson that consumers could end up learning the hard way."

A credit rating is determined quite a bit by the data from credit card businesses. In fact, over half of the data on the credit score report comes from the companies.

As long as you are using credit cards responsibly, there is no problem with having them, according to Cordray. He explained that many customers will be getting retailer credit cards in order to get gift purchase discounts, but the customers should always be careful to pay it off every month. If not, there could turn out to be a black mark on their credit history leading to a higher cost on their mortgage down the road.

No more charge card spending

During the tough economy, consumers have had a really hard time with credit cards. They are using charge cards for daily expenses rather than just emergency situations now. In fact, the stagnant wages, high joblessness and increased costs have made it really hard to survive without some form of credit.

The CFPB teaching might be needed after all. About 40 percent of all low- to middle-income families use charge cards to pay daily expenditures such as food, rent and clothing, according to the CRL.

Protecting consumers with the Credit card Act

The charge card reform from the Credit card Accountability Responsibility and Disclosure Act of 2009 has restricted and eliminated a ton of additional high penalties and fee structures found on card acts. This has made it much easier to have a credit card without worrying about additional charges. Americans have certainly managed to cut back high charge card balances during the recession for this very reason.

Get info and Stay informed

Americans also fall down on the subject of staying informed of their credit standing. According to the Consumer Financial Protection Bureau, less than 20 percent of consumers bother to get copies of their credit score. Frequent monitoring of credit reports allows customers to identify any reporting errors or incidents of fraud before being blindsided with the news when they go to take out a sizable loan.




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