Batting Average versus Credit Scores

Channeling the passion for sports into financial literacy

 

Many Americans are knowledgeable when it comes to sports scores and stats. You can chat with a guy sitting next to you on the train and he can tell you right away how many yards his favorite football team rushed last year or the current standings of his hometown baseball team.

However, it's a different ball game when you ask someone about their credit score. Surveys in recent years have indicated that the majority of Americans do not understand what credit scores mean to their personal finances and many who struggle because of low credit scores have no idea what steps they can take to improve their credit situation.

Loretta Abrams, senior vice president of Consumer Affairs at HSBC-North America encourages consumers to learn and enhance their credit scores  which affect every aspect of our daily lives, from purchasing homes and cars to finding employment and renting an apartment.

Why Your Credit Score Matters

Credit scores have been developed to predict a consumer's credit worthiness. Credit reporting agencies use a formula to crunch all the stats from a person's credit activities into one number - usually between 300-850. The higher the score, the better (just like a baseball batting average). High credit scores mean that a consumer may have access to loans and other financial services at a more favorable rate. For example, an average homeowner can save thousands of dollars in interest over the term of a loan if his or her credit score is above 700, compared to someone whose score falls below 660.

In addition, employers, insurers, and landlords are increasingly incorporating individuals' credit reports into their line-ups to inform their decision-making. Therefore, understanding credit scores and maintaining good credit history are critical to your personal financial high standing in today's challenging economy.

Improve Your Credit Score and Your Personal Financial Future

A baseball player increases his batting average by taking more batting practice and working on his swing. Similarly, there are proven methods to improving your credit score. The first step is to check your credit report. The FACT Act of 2003 allows consumers to receive a free credit report, from each of the three credit reporting agencies, once each year. Take advantage of this benefit; request your report and check it for accuracy. If your credit score needs to be raised, develop a plan and begin now to adopt new behaviors that will have a positive impact on your credit score.

Keep your eye on the ball with the following steps: create a budget, pay all bills on time to keep credit card balances low and only open new credit accounts when absolutely necessary.  If you want to increase your knowledge in personal finance, there are all kinds of free resources available on the internet. For example, HSBC-North America has a financial education website, YourMoneyCounts, which provides consumers with free information on a wide range of topics, from credit scores to homeownership preservation.

As sports fans are tracking the batting average of their favorite baseball players for the season, we also encourage everyone to spend time learning how to manage money and track and improve their credit score. A good credit score means more resources are accessible to you in life, gives you the peace of mind to enjoy all the games you want and more importantly offers you the hope for a winning and healthy personal financial future.

 

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These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action. Contact us for more information.