For Immediate Release - February 09, 2007

Avoid Credit Pitfalls Today

OCA Offers Important Strategies On How To Earn Good Credit

Every day, consumers conduct some type of financial transaction requiring an educated decision: shopping for a mortgage or auto loan; understanding and reconciling credit card statements; choosing a retirement plan; comparing health insurance policies; understanding what's on their credit report and how it affects the ability to get credit; and simply deciding how to pay for a purchase.

"Consumers have the ability when they are informed to avoid credit pitfalls that will help them earn good credit standing and easily manage their finances," said Daniel C. Crane, Director of Consumer Affairs. "I urge consumers to take advantage of their free credit reports and carefully review them for any errors and make arrangements to fix any problems quickly."

To wrap up National Consumer Protection Week the Office of Consumer Affairs and Business Regulation offers the following important information on credit to help assist Massachusetts consumers in making informed decisions. Consumers are encouraged to call the Consumer Affairs hotline with any questions at (888) 283-3757.

Tip 1: Building Good Credit

  • Building good credit can be as easy as obtaining one major credit card and using it responsibly. By making your payments on time, you will establish good credit. Avoid paying only the minimum monthly payment or much of your bill will be the interest of the loaned amount and not on the item purchased. Spend wisely and purchase only those items you can afford.

Tip 2: Credit Reports

  • Every consumer is eligible to receive one free copy of his or her personal credit report from each of the three major credit bureaus (Experian, Equifax and Trans Union) every 12 months, visit www.annualcreditreport.comor call (877) 322-8228 to obtain your free reports. Massachusetts residents are eligible for an additional report from each of the major credit bureaus under state law. Bay State consumers may obtain one report via the website and the second report by calling the toll free number.
  • Understanding your credit report is a powerful tool to maintaining good credit. Good credit will make it easier for you to rent an apartment, buy a home, get a job, or buy a new car. Nonpayment and/or late bill or credit card payments can result in a bad credit score and can cost you money by triggering higher interest rates on your credit cards sometimes without advance warning.

Tip 3: Pay More Than Your Minimum Payment

  • A credit card balance of $1,000 will take 144 months (12 years) to pay off if you pay only the minimum payment of $25 required each month at 17 percent interest. By only paying the minimum, you will pay, $979.14 in interest to borrow $1000, nearly doubling the amount you owe. If instead you pay an additional $50.00 per month for a total of $75 on your credit card bill, it will be paid off in 24 months, and would cost you only $184.19 in interest. Make sure you only buy what you can afford and try your best to pay more than the minimum required.

Tip 4 - Start Saving Now, It's Never Too Late

  • Start saving today if you haven't already. Your money will grow with interest over time. It is important to open a savings account in a bank or credit union where your savings will earn interest and be protected from theft or fire and insured by FDIC. Banking at check cashing stores is a bad deal for consumers. Remember, you should never pay a fee to get your own money.

National Consumer Protection Week highlights consumer education efforts in the fight against fraud in communities across the nation. This year, NCPW's national and state consumer officials encourage everyone to read up and reach out to be an informed consumer. By gathering and sharing information, consumers can be more confident, savvy, and safe in the marketplace. To learn more about National Consumer Protection Week visit .