Every Fourth of July I look forward to two things: celebrating the holiday with friends and family (around our house, we like a good barbecue), and appreciating the freedoms we enjoy every day. As we think about Independence Day and our freedoms, let’s not forget the importance of understanding how to work toward our own financial independence.
Independence Day reminds us that we have the freedom to pursue any goals we set our minds to — that’s the American Dream. For many, part of that dream is achieving financial independence and success. Many of us have mortgage, car, and tuition payments that we make every month and — sometimes — the idea of managing debt can seem challenging.
While it can be overwhelming, here are some small steps you can take today to make managing your debt easier and move closer to financial independence:
- Monitor your credit regularly: Make sure your credit report contains current and accurate information. If you find errors, correct them as soon as possible because they may negatively impact your credit score and even indicate possible identity theft. You can request a free copy of your credit report from each of three major credit reporting agencies — Equifax®, Experian®, and TransUnion® — once each year at AnnualCreditReport.com or call toll-free 877-322-8228.
- Pay more than the minimum payment due: Paying more than what’s due, or paying every two weeks, instead of the minimum balance once a month, can help you to pay down debt faster and may also improve your credit score.
- Know your limits: Being close to or maxing out your credit limits may negatively impact your credit score. It’s a good idea to keep your balance on revolving lines under 30 percent of your credit limit. Generally, the lower your balances, the better your credit score.
- Take on new debt only when needed: Apply for or open new credit accounts only if you need them. Having too many accounts can lower your credit score and may become difficult to manage.
- Always pay on time: Payment history makes up 35 percent of your credit score. If you have missed a payment, pay as soon as possible — it makes a difference. Credit reports will track if you are 30, 60, or 90 days late on payments.
Because more than half of Americans want to learn more about credit, according to a 2014 Wells Fargo survey, we recently enhanced the “Borrowing and Credit” section of wellsfargo.com. With the redesign, we made that section (one of the most popular links from our home page) mobile-friendly. That means when consumers come to us using a smartphone or tablet, it will be easier for them to find the information that can help them make responsible, informed decisions about borrowing and credit.
The redesign also includes a refreshed Smarter Credit™ Center where consumers can find tips and guidance to help them establish, improve, or rebuild their credit and stay on track with debt.
As I mentioned before, managing debt can be challenging, but if we’re committed to pursuing it, it can yield incredible results. Said James Truslow Adams, who coined the “American Dream” phrase: “The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”
For more information about credit and how to manage it, visit the new Smarter Credit Center at www.wellsfargo.com/smarter_credit.
Korotzer leads the Wells Fargo Consumer Credit Solutions Marketing team, where he oversees marketing support for several Wells Fargo businesses, including credit card, personal lines and loans, direct auto, fee-based services, rewards, and student lending.