ONPOINT: Four ways to make your credit work for you
I grew up in Columbia County and was 3 years old when I first visited the Scappoose Fred Meyer that now houses the OnPoint Community Credit Union branch I manage. I've watched firsthand as this historic community has grown and changed over the years.
One of the most fulfilling parts of my job is sitting down with members to get to know them and offer face-to-face financial education and support. As we enter a new year, I encourage you to take a proactive role in your own financial well-being.
Creating a realistic budget and establishing an emergency fund should be two of your first steps, but I also recommend that you take the time to monitor and build healthy credit.
Here are some tips for making your credit work for you, wherever you are in your journey:
Don't be afraid of credit cards
They tend to get a bad rap, but credit cards are often the most attainable method of building a credit score, and when used strategically, they can be an effective tool to increase your score.
Use your card regularly, but only for purchases you can afford to pay off each month. Be mindful of your utilization ratio, which is calculated by dividing your outstanding balance by your credit limit. For those looking to build strong credit, a utilization ratio of 10% or less will be most beneficial to your credit score.
Many cards have no annual fee, so paying off your balance each month means you'll pay nothing to the credit card company — and if you find a card that offers rewards, you may even save money while you spend it.
Only enter into contracts you can afford to pay
Leasing a new iPhone through your wireless carrier might seem like an easy way to increase your credit score, but these installment loans don't get reported to credit bureaus unless you miss payments — meaning they can only serve to hurt your credit.
Installment loan payments are often relatively low, but add up quickly. If you fall far enough behind, your account may be sent to collections, which can drop your credit score considerably.
If you own a home, consider a home equity line of credit (HELOC)
A HELOC is a revolving line of credit secured by your home. If your home is worth more than you owe, you may be able to use that equity to borrow against your home's value at a low rate.
While most people don't consider taking out a HELOC until an emergency arises, opening the line of credit proactively means the money will be there if you need it, with no monthly payment for funds that aren't touched.
HELOCs are versatile products that give you financial leverage, whatever your goals. With home values still high, now is a great time to explore whether or not a HELOC is right for you.
Monitor your credit
While looking at your score can be intimidating, knowing this detail about your credit situation can help prepare you to achieve your financial goals.
Many reputable banks offer convenient built-in credit-monitoring apps, which have the added benefit of preventing the need to provide your information to an additional third party.
Scores may vary from website to website and credit bureau to credit bureau, but checking your reports regularly can provide insight into your spending and repayment behaviors, as well as inquiries, delinquencies and fraudulent activity. You can also request one free report per year from each credit reporting company at annualcreditreport.com.
It's easy to feel alone when managing your money, but always remember, there are financial experts out there, like me, who are invested in our community's past and future, and are available to help you tackle debt head-on to set you up for success. If you have questions about credit, loans or other ways to improve your financial situation, we invite you to stop by our branch inside the Scappoose Fred Meyer. My team and I would be happy to answer any questions you may have and help you create a financial plan for the coming year.
Amanda Dugdale opened her first bank account at Portland Teachers Credit Union, now OnPoint Community Credit Union, as a child. She joined the OnPoint team in 2016 and has held positions as a teller, member service representative, member relationship officer and assistant branch manager. She now serves as branch manager at the OnPoint Scappoose branch located in Fred Meyer.
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