Washington County Weekend Post

Credit plays a vital role in helping people realize their personal and financial goals. A good credit score can help people qualify for favorable home loan terms, ultimately paving the way for them to move into their dream homes. Strong credit histories also can help con- sumers earn perks, and young people who learn to use credit wisely can avoid potentially costly interest charges that tend to hamper many young adults' finan- cial freedom. Many consumers strug- gle with managing credit. According to FICO ® , a data analytics company that developed the FICO score that many lenders use to determine consumer credit risk, more than 10 percent of consumers in the United States have credit scores lower than 550. Any score below 550 is considered very poor. No two consumers are the same, but many strug- gling to establish good cred- it histories may engage in certain behaviors that can hurt their credit scores. • Taking out too many lines of credit: Consumers without much experience managing their finances, such as college students and young adults, often find credit offers hard to resist. Retailers may offer signifi- cant discounts at checkout counters to shoppers willing to sign up for store credit cards. Inexperienced con- sumers may not recognize that such cards often feature inflated interest rates, espe- cially when compared to more consumer-friendly cards. Avoid opening too many credit accounts, as doing so can adversely affect your credit score and make it easy to lose track of spending. • Letting interest charges pile up: Paying interest on consumer debt like credit cards will not help consumers improve their credit scores, so pay balances off immediately. That's easier to do if you only have one or two lines of credit that you monitor reg- ularly. • Using credit for daily purchases: Credit is not cash in your pocket and it isn't money withdrawn directly from a checking or savings account, which is the case when using a debit card. So it's easy for con- sumers to lose track of their daily spending if they're doing that spending with a credit card. Balances can quickly pile up and, if they can't be paid off in full when the bill comes due, interest charges will begin to accu- mulate. This trap can be avoided if consumers com- mit to using credit only in emergency situations or when purchasing big-ticket items that they know they can pay off when the credit card bill is due. • Failing to monitor credit score: It's now easier than ever for consumers to track their credit scores. In fact, many credit card com- panies provide free monthly updates to card holders, who won't have to lift a finger to see if their scores have improved or worsened over the last 30 days. Consumers should take advantage of this relatively recent perk so they can see just how their use of credit is affect- ing their overall scores. They can then use that knowledge to improve their scores going forward. Certain behaviors can negatively affect con- sumers' credit scores. By learning about such behav- iors and taking steps to avoid them, consumers can take a big step toward real- izing their short- and long- term financial goals. GMTODAY.COM SUNDAY, JULY 25, 2021 • WASHINGTON COUNTY POST • 3A The number of retirees is on the rise. Data from the U.S. Census Bureau points out that, by 2030, there will be 81.2 million Americans over age 65, and many of them will need help taking care of themselves. Caregiving is a big responsibility. One crucial role caregivers may take on involves managing a loved one's finances. AARP states that acting as a money man- ager becomes especially important if a loved one begins having trouble keep- ing a checkbook or becomes confused about money. The Family Caregiver Alliance ® indicates millions of Ameri- cans are managing money or property for a family member or friend who is unable to pay bills or make financial decisions. Juggling one's own finances and the responsi- bilities of another person's money can take its toll. Here are ways to navigate these tricky waters. • Discuss plans in advance. Have conversa- tions even before an aging loved one needs caregiving. Talking through difficult topics when parents are healthy can simplify deci- sions later on. • Open a joint account. Joint back accounts make it easier for caregivers to man- age loved ones' money if the person becomes physically or mentally incapacitated. When necessary, you can step in as a money manager to pay bills, make deposits and withdrawals and moni- tor account balances. • Make legal fiduciary changes. AARP suggests drawing up legal documents to manage all financial accounts. A power of attor- ney is a legal document in which one person assigns another the power to make financial decisions on their behalf. This also protects family interests, so that another relative like a sib- ling, who may want his or her share of a loved one's money, will not have access. Documenting fiduciary changes in the letter of the law can serve as a measure of protection against poten- tial problems. • Put your priorities first. You may end up run- ning yourself emotionally and financially ragged catering to a loved one's needs. According to a 2015 study from the National Alliance for Caregiving, an estimated 43.4 million American adults provide unpaid care to an adult or child. Taking repeated time off of work or paying for loved ones' needs out of your own pocket can take its financial toll. Do not take on unmanageable debt. • Ask for help. Speak with a financial advisor and/or elder care attorney about the best ways to man- age a loved one's money to ensure an aging parent or child will be provided for. Arranging assets in certain ways can make individuals eligible for certain benefits. Caregivers: How to manage a loved one's money Behaviors that can hurt your credit score

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