(Photo by Mikhail Nilov: https://www.pexels.com/photo/a-woman-using-her-credit-card-online-6969755/)
As credit card delinquencies rise nationally, Black Americans facing financial disadvantages could be impacted even more.
White provided BLACK ENTERPRISE email commentary of new studies indicating that 46% of Black adults have been denied in their application for credit versus 22% of white adults. Further, the finding comes amid reports of an increasing number of Americans sliding behind on monthly credit card payments.
White shared some of the biggest repercussions of missing credit card payments. According to her, many people underestimate the impact of credit on your ability to build lasting wealth and achieve your financial goals. For example, a good credit score can help you apply for a mortgage or take out a loan, all of which will bolster your future financial profile.
However, she added, establishing a strong credit history is not easy.
“And with missed payments making up 35% of your credit score, high delinquency rates will lead to lower credit scores—putting more boundaries between you and those big milestones in life. Late payments can stay on your credit report for up to seven years. And rebuilding your credit, after several missed payments, can cost you more time and money,” she explained.
Here are some steps that White says credit card users can take to mitigate the impact of late payments and work toward fixing their credit score:
“Set up automatic payments: Most credit card companies give you the option to set up automatic payments to avoid missing your payments. This will not only protect your credit score but ensure that you are not paying extra late fees or penalties.”
“Utilize your existing bills to build credit: Many people don’t know there are multiple ways to increase your credit score. For example, you can now report your biggest monthly payments, such as your rent and utilities, to the three major credit bureaus to help bolster your credit. This adds new trade lines and payment history to your credit report, important factors in your score.”
“Make sure you are constantly reviewing your credit report: Having a clear sense of what is impacting your credit score–any errors or changes– is crucial to make the necessary changes to bolster your score.”
“Create a budget: Inevitably, your credit score is linked to your overall finances. As you work toward increasing your financial profile, take some time to evaluate what works and what doesn’t when it comes to your finances. Nobody knows your finances better than you, so make sure that you are creating a budget that is sympathetic to your needs, your income, and your long-term goals. Make necessary changes that can benefit you in the short term, including canceling subscriptions or identifying areas in your life where you can cut spending.”
Check out more informative tips here.
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Source: Black Enterprise