Finance Technology and You: Getting Proactive With Credit

Technology has a long history of reshaping the relationship between people and their money. Remember life before the ATM? Imagine how different your spending habits would be if you still had to walk into a bank and speak with someone every time you wanted extra cash.
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Technology has a long history of reshaping the relationship between people and their money. Remember life before the ATM? Imagine how different your spending habits would be if you still had to walk into a bank and speak with someone every time you wanted extra cash.

Good technical innovations are supposed to make people more powerful, more connected, and more in control -- and today, innovation is happening faster than ever before. New breakthroughs in financial technologies are once again redefining our relationship with money and empowering people to take more control over their own finances. Two great examples of this trend include: online banking and digital wallets, providing consumers with new ways to monitor and access finances from anywhere at anytime.

Yet when it comes to getting access to credit products like loans or credit cards, a lot of the tech innovations in recent decades have benefited banks and corporations more than the American people.

The big innovation in credit scoring in the past 20 years has been creation of computerized systems that look at hundreds of thousands of variables about a person to determine a credit score. Credit scores start to feel like something that happens "to" us rather than something that is actually controlled "by" us for our own pursuits. And that's a shame because your credit score is becoming increasingly important for access to not just loans, but also lower apartment deposits and even job offers!

Turns out Americans have a few easy ways to gain more control over their credit -- all it requires is a slight mental shift. It's time for consumers to embrace a new mindset of proactive credit enhancement.

The Best Time To Tune Up Your Credit Score Is Before You Need Credit

Waiting until the moment you need a loan or line of credit can lead to poorly priced loans not reflective of a borrower's true character. It is like applying for a job with no employment history -- a difficult task for anyone.

Instead, start by building a stable credit foundation with good habits and attention to details. In some ways your credit score is much like a resume. It is a record of your past accomplishments, and mistakes. Any large gaps in employment (improper credit behavior) on that resume can stand out as a red flag.

You can get started with these three simple steps:

Know your score:The easiest step in taking more control of your credit score is first knowing it. By law every American is entitled to one free credit report per year from each of the three major credit reporting bureaus: Experian, Equifax, and Transunion. There are dozens of great free websites that can provide you with a credit score immediately, so take advantage!

Techno-jujitsu:Just like big banks put computer systems to work for them, you can also use modern technological innovations to work for you. Many banks and credit card issuers offer features like auto bill pay which can virtually eliminate your chance of a late payment. Meanwhile, new online technology-driven alternative lenders are providing borrowers with new ways to build credit by offering low interest loans. When payments are made responsibly, these lenders will leave positive marks on your credit history which can increase your creditworthiness.

Talk it out: No matter how much technology influences finance, it is still a deeply human subject. All monetary systems are based on trust between people, after all. In fact, many of us share the same financial concerns and aspirations. Your parents, siblings, colleagues, classmates, and grandparents likely went through the same financial challenges that you're facing right now. Whether it's figuring out how you're going to pay for a wedding, afford a vacation, or get out from under a high-interest credit card, chances are you've got people in your network who have dealt with that type of problem before and could advise you personally.

Rather than being shy about bringing up personal finance topics, it turns out (according to a recent Nielsen survey conducted on behalf of Vouch) nearly three out of four Americans are willing to help family members with financial matters. Moreover, 84 percent of the Millennial respondents stated they would be willing to lend to family and friends, while 67 percent of all respondents said they would lend more than $500 to family members dealing with life's "unexpected costs."

Without a doubt modern technology has changed our relationship with money. In order to be financially secure today, we should be more proactive about planning and make use of the many tools available. That way we can build solid financial foundations in advance of crises. All it takes is a willingness to start.

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