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Improving Credit Score Second Priority for Consumers in 2010

By Sally Maison
Published: Friday, January 8th, 2010

Consumers are well aware of the importance of a good credit score that is why many of them have resolved to add more points to their ratings this year. However, a recently published survey by the National Foundation for Credit Counseling (NFCC) reveals that majority of Americans plan to reduce debts this year. Those who answered debt reduction as their number one financial priority leads those who chose credit score improvement by a huge gap.

Improving Credit Score Second Priority for Consumers in 2010 A recently published NFCC survey reveals that a huge majority of consumers believe that reducing debts is the best way to become financially fit in 2010. When asked what their financial New Year’s resolution is, 76 percent of the 6,100 survey respondents answered that they want to reduce debts while only 11 percent answered that they plan to improve their credit score; 7 percent answered that they want to decrease dependence on credit cards, which is similar to decreasing debts. Meanwhile, only 6 percent plan to save more this year.

NFCC spokeswoman Gail Cunningham remarks that it is worthwhile to aim at reducing debts but she finds it worrisome to see that only 6 percent of the respondents cited saving as their top financial priority. Cunningham further said the problem only becomes magnified when contrasted with the advice of the CEOs from NFCC member firms who placed savings as their number suggestion for people who want to become financially stable. She added that the huge difference between those who want to save and those who want to cut back on debts shows that there is a need for financial education.

Finance advisers also suggest that there is a need to make consumers more mindful of their credit ratings. Having an excellent credit score can make a person easily qualify for a home or car loan. People with low credit scores have to pay higher interest rates and may find it difficult to get approval from lenders.

Experts emphasize that there is a need for better credit ratings since creditors continue to raise their lending standards. Just last month, Fannie Mae raised its minimum credit score requirement to 620 from its previous cutoff of 580.

Since creditors do not only ask for higher credit scores, but for higher down payments as well, finance specialists say there is a greater reason for consumers to save now more than ever. NFCC suggests placing 10 percent of any paycheck received towards savings so cash will be available when needed. Cunningham advises consumers to track their spending for 30 days so they can see where their money goes. This will help them build a better financial plan for a more stable future.

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