Total household debt increased by $93 billion to reach $18 trillion by the end of 2024, according to the Federal Reserve Bank of New York.
COLUMBUS, Ohio — March is Credit Education Awareness Month.
Many central Ohioans are struggling with debt as inflation and the cost of living continue to rise.
According to the Federal Reserve Bank of New York, total household debt rose to $18 trillion by the end of 2024, increasing by $93 billion. The Fed also noted that credit card balances spiked by $45 billion, totaling $1.21 trillion by December.
10TV spoke to Rob Brunette with the Outlook Financial Center about ways to maintain or improve your credit score.
10TV reporter Bryn Caswell: “For those who may not know, what’s considered good credit versus bad credit?”
Brunette: Having a good credit score, ideally 740 or higher, opens the door to better offers. To maintain good credit, paying bills on time and having a lengthy credit history are key. One common pitfall is carrying too much debt on credit cards, which can lower your credit score.
Caswell: “If someone is suffering from low credit scores, what can they do to improve it?”
Brunette: First, it’s crucial to check your credit reports with the bureaus for accuracy. If there are errors, dispute them promptly. You can access a complete credit report from each of the three major credit bureaus once a year. While this report doesn’t include a credit score, it details your payment history and credit balances, providing insights on areas for improvement.
Caswell: “What else should people be doing to keep their credit in good standing? I have heard that having a little bit of debt is actually healthy and beneficial to your credit score.”
Brunette: “That’s correct. If you’re only using some of your credit, let’s say you’ve got $50,000 available credit through various credit cards and things of that nature, is if you’re using less than $5,000 of that $50,000, that’s under 10%. That’s going to be scored very favorably. And if you want to be able to get, you know, one of the things I encourage people to do too, if you’ve got a couple of credit cards, use them for specific purposes. You know, I’m going to use this one for food. I’m going to use this one for travel or buying gasoline. That’s a great way for a young person to also build initial credit to have a focused purpose.”
Caswell: “A lot of people don’t like talking about money. It’s a very sensitive subject, but why is it so important to have these open discussions about credit and overall financial literacy?”
Brunette: “You need to understand how the system works, and not that you can game the system, but understand how it works. There are so many people in different businesses that started using credit scores. Insurance companies have started using them. Obviously the credit card companies, but if you’re trying to get a mortgage loan, they’re going to be looking at your credit score. All of them are looking at what is your ability to repay. That’s what they’re looking at. And the longer your credit history showing this person’s paid all of their bills on time. That plays very, very well both in your score and in the eyes of the credit bureaus.”
