Published on March 08, 2022
By GreenPath Financial Wellness
For many years, research has shown that women in the U.S. are approved for less when they apply for credit products and are more likely to be denied outright. Perhaps because of this, women also put off applying for credit, even when they need it to get on solid financial ground.
Compounding these challenges is the continued gender pay gap experienced by women, rising inflation, and other market conditions that put pressure on household budgets.
At Community Choice, we want to make sure everyone has equal opportunities to achieve the life they desire. If you’re experiencing these challenges, review the following tips to get on solid ground when it comes to credit.
Build a Healthy Credit History
Getting credit in your name is key to building a healthy financial foundation. If you are just starting to establish your credit or are unable to get approved for credit on your own, consider starting off as an authorized user of a family member’s credit card if you currently don’t qualify for a credit card or loan on your own. Another option is to get a secured credit card in your name, which is a type of credit card that is backed by a cash deposit from the cardholder. Many secured credit card borrowers are issued a traditional, unsecured credit card after making on-time payments for a period of time.
Review Your Credit Report
Regularly check your credit report. A free credit report from AnnualCreditReport.com shows all the information that is used to determine your credit score. Or you can simply log in to e-Banking. Under Financial Wellness, click on Credit Score. Credit Score, Powered by SavvyMoney, allows you to check your score, see special offers, and provides resources that help you manage your credit.
A good credit score creates a path to opportunities you may not otherwise be able to access. Lower interest rates are offered to people with better credit scores ̶ that means more money staying in your pocket. It's also easier to get a loan or line of credit when your credit score is in good shape.
Improve Payment History
If you already have a credit history and know your score, pay attention to your payment history, which is the biggest single factor used to calculate your credit score. Late payments (even a couple of days), past due accounts, and accounts in collections all have a negative impact on your credit. Regular, on-time payment of the minimum amount (or greater) will improve your credit score. An on-time payment history in the range of 18 months or longer will begin to show results in an improving credit score.
Monitor Your Credit Card Utilization
If your credit score is not where you want it to be, check your credit utilization. Credit utilization is calculated by the amount you owe — not relative to your income but compared to the total credit limit available to you, expressed as a percentage. For example, if your card balance is $600 and you have a spending limit of $2,500, your credit utilization is $600/$2,500 or 24%. As a rule of thumb, for a healthy credit score, your credit utilization should be less than 30%. SavvyMoney will also help you keep an eye on your credit and understand the factors that are influencing your score.
- As you use your credit card or take on other debt, pay down your balance as early as your budget allows. If you can make small payments throughout the month, this helps keep your balance down and lowers your credit utilization.
- Decrease spending. Find areas in your monthly budget where you can cut back on spending to build a buffer in your budget and better manage debt payments.
- Consider your full financial picture. Credit and debt management are only pieces of a larger puzzle. Look at your monthly income and expenses, such as housing, transportation, medical, and other expenses.
Source: Federal Reserve
This article is shared by our partners at GreenPath Financial Wellness, a trusted national non-profit.
Did you know?
Though it seems unheard of today, it wasn’t all that long ago that women had few options when it came to their finances.
- In 1938, the federal minimum wage was established as a result of the passage of the Fair Labor Standards Act, eliminating many pay differences between men and women for hourly jobs.
- In the 1960s, women gained the right to open a bank account.
- In 1974, the Equal Credit Opportunity Act passed. Before its passage, many banks granted credit cards to women only with their husbands' signatures and outright refused to issue them to unmarried women.
At Community Choice, we believe Community = Everyone. We’re here to help our neighbors across the state achieve the life they desire.