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Be a smart borrower by getting a handle on your debt, paying your bills on time, and monitoring your credit report and credit risk scores.

Get a handle on your debt. Financial experts generally recommend that you keep your consumer loan payments below 10% to 15% of your monthly take-home pay. Add in your mortgage payments, property taxes, homeowners insurance premiums, and any private mortgage insurance payments, and your total debt generally shouldn’t exceed 36% of your monthly gross income.

To see where you stand, run your monthly loan payments through a debt level online calculator.  From there, figure out how to pay down your debt with the least amount of interest using a debt reduction calculator.

Pay your bills on time. Although it sounds like obvious advice, paying your bills on time is essential to building and maintaining a solid credit history. That’s because your payment history is the most important factor in your credit scores. And your credit scores are one of the main tools lenders use to determine whether to grant you credit, and if so, how much and at what interest rate.

Late payments become a part of your credit record and make it harder to get credit in the future.  Plus, the lender may take legal action against you, and if you default, may sell the collateral that you put up as security for the loan. 

What if you already have some strikes against you? Fortunately, lenders will take a pattern of recent on-time payments into account.  So it’s never too late to start repairing a damaged credit history. One way to make sure you pay your bills on time is to sign up for an automated payment service.

Check out your credit reports. Lenders, employers, landlords, and insurers all rely on the information in your credit reports to help them make decisions about whether to loan you money, hire you, rent to you, or insure you.

So it’s smart to review your reports periodically to verify that the information is accurate and up-to-date, especially before you need to borrow for a large purchase, such as a vehicle or house.

Even if you’re not planning to borrow money soon, or ever again, it’s important to review your credit reports regularly since your current lenders monitor your report.  Plus, you never know when you’ll be applying for a new job or an insurance policy. Moreover, with credit fraud on the rise it’s also important to check your credit reports every so often for any accounts or transactions that aren’t yours.

Creditors don’t report to all three national credit reporting agencies and the agencies don’t share their data. So your credit report from each agency could be substantially different. That’s why you need to check all three of your credit reports.

Thanks to new federal law, you’re now entitled to request a free credit report once every twelve months from each of the three nationwide credit reporting companies. To make obtaining your reports easier, the Act also requires the establishment of a centralized source for requests.
To check out how to request your credit reports, go to the official central website,

Know your credit risk scores. Credit scores are one of the main tools lenders use to determine whether to grant you credit, and if so, how much and at what interest rate. Credit risk scores are an objective summary of the information in your credit reports. Your credit risk scores reflect your creditworthiness, with higher numbers typically indicating lower risk.

You can obtain your credit risk scores for a small fee from each of the three national credit reporting agencies. Just as your credit reports vary from each of the agencies, each of your three credit scores can vary significantly.

For information about how to request your credit scores, visit the websites of the three national credit reporting agencies:

Article is for educational purposes only and is not intended to provide specific tax or legal advice. For answers to tax questions, please see your tax professional. For legal questions, consult an attorney.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.

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