By: Wil Lewis, Chief, Diversity, Equity and Inclusion Officer at Experian and John Hope Bryant, CEO of Operation HOPE
When it comes to achieving financial goals, there shouldn’t be any unknowns. However, the world of credit can be a tricky one to navigate if you don’t have a lot of experience with credit.
At Experian, we are committed to helping individuals live their best financial lives and reach their fullest potential by providing tools, education and resources. Credit education is an essential component in driving financial inclusion and a key reason we release our annual State of Credit report each year. We want people to understand the information included in their credit report and how it impacts credit scores.
As we end the second summer since the arrival of COVID-19, our report is more important than ever to gain perspective on the financial health of the nation. And, despite a challenging year and a half, new data shows consumers are managing credit well with the average credit score climbing seven points to 695 – the highest it has been in more than 13 years.
Though these figures are positive, as Chief, Diversity, Equity & Inclusion Officer at Experian, I know there is not a single report that accurately reflects the reality of everyone’s unique financial situation.
Financial literacy and health begins with resources. It is difficult to understand what your credit score means and how it will affect your future when you were never given the resources to learn about money management. This is especially prevalent in underserved, racially diverse communities where there has historically been a lack of financial education and resources. According to Consumer News and Business Channel, about 54 percent of African Americans and 41 percent of Hispanics report having no credit score or a poor to fair score. Our goal is to change these percentages by providing the tools necessary to achieve financial freedom and success.
In an effort to focus our effort on communities impacted the most, we have partnered with Operation HOPE because we share a common goal: financial empowerment for African American and Hispanic consumers. Operation HOPE is the nation’s largest nonprofit dedicated to improving financial literacy. They are committed to educating our communities about how creating a strong credit history and responsible credit management can help protect and improve your financial health.
As the CEO of Operation HOPE, I know there are many communities in critical need of more financial education and resources, and by helping people raise their credit scores, we can shift their mindset from one of survival to thriving. And this is why we are excited to launch the HOPE Financial Wellness Index to highlight the average credit score in every state. The index will be a key asset in identifying communities in most need of financial education as well as developing programming that will give people from those communities the tools they need to build the future they want.
I’ve always thought that if you don’t understand money, you are chained to a system that does not care about you. That is why our focus has always been and always will be financial dignity and inclusion at Operation HOPE. We equip young people and adults with the ﬁnancial tools and education to secure a better future—coaching them through their personal aspirations and life’s challenges, and facilitating their journey to ﬁnancial independence.
African American and Hispanic consumers make up such an important part of our national economy and tips like the four below can assist you with achieving your financial goals that may seem out of reach:
1. Take advantage of free resources and education. If you have limited or no experience with credit, it can be hard to know where to start. There are resources available to help. You can learn about ways to build and manage credit from Experian online, their free mobile app, or through Operation HOPE’s free workshops and one-on-one counselling services.
1. Check your credit reports and scores often. You can check your credit report with each of the three credit bureaus for free once by visiting AnnualCreditReport.com. You can also get a copy of your Experian credit report and FICO score for free on Experian’s website or mobile app.
2. Keep your utilization rate low. Nothing will damage your credit scores faster or more than missed payments and high balances. Your total credit card balances should not be more than 30 percent of your total credit card limits, and you don’t want any one card to have a balance of more than 30 percent of the limit on that one card. Keep in mind 30 percent is not a goal or a target. If possible, paying your balances off in full and on time each month is the best way to protect your credit scores.
3. Use free tools like Experian Boost. You can potentially increase your credit score instantly by getting credit for paying your telecom, utility and streaming service bills on time with Experian Boost.
Visit www.experian.com to learn more about the State of Credit report, your credit score and how Experian can help, and www.operationhope.org. for more information on the free workshops and to review the HOPE Financial Wellness Index.