The CFPB says that how you use your credit cards has the most effect on determining your credit rating. The conclusion was one of several in the CFPB’s brand new study of credit reports.

Always responsible use of cards

That most likely isn’t surprising to most people. However, it does spotlight where consumers should concentrate their efforts in order to keep credit scores high for the next time they need to purchase a vehicle or want to take out a mortgage.

CFPB director Richard Cordray said: „Credit cards are given great weight in credit profiles — a lesson that consumers could end up learning the hard way.“

A credit score is determined quite a bit by the data from credit card companies. In fact, over half of the data on the credit score report comes from the businesses.

As long as you are using credit cards responsibly, there is no problem with having them, according to Cordray. He explained that many consumers will be getting retailer charge cards to be able to get gift purchase discounts, but the consumers should always be careful to pay it off each month. If not, there could turn out to be a black mark on their credit report leading to a higher cost on their mortgage down the road.

Hard on customers

With the economy still not up to speed, there are a lot of difficulties with money. There is high unemployment, stagnant wages, increased costs and more. That means many customers are using credit cards for daily expenses rather than just for emergencies. American customers have not been able to stop during the economic downturn.

The CFPB teaching could be needed after all. About 40 percent of all low- to middle-income families use credit cards to pay daily expenses such as food, rent and clothing, according to the CRL.

Exploring the Charge card Act

Because of the Charge card Accountability Responsibility and Disclosure Act of 2009, many consumers have been able to reduce high credit card balances during the recession. The Act has made it extremely hard to have extra high penalties and fee structures that do not make any sense. The reform has been helping many consumers.

Important to Stay informed

Less than 20 percent of consumers really get their credit score regularly, according to the Consumer Financial Protection Bureau. Consumers can point out errors or fraud more effortlessly and fix any problems before it shows up when applying for a large loan if they are keeping track of their credit. Americans are obviously not doing enough when it comes to staying informed.

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