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Perham Navigators: The secrets to building good credit

During a recent Perham Navigators meeting, community members had money on their minds, specifically credit. The group invited Mortgage Banker Lori Mattfeld to discuss the often hotly-debated topic of credit and money lending. Mattfeld went over c...

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Throughout the meeting Mattfeld answered a bevy of questions about store cards, credit growth, and good financial practices. Michael Denny/Perham Focus

During a recent Perham Navigators meeting, community members had money on their minds, specifically credit. The group invited Mortgage Banker Lori Mattfeld to discuss the often hotly-debated topic of credit and money lending. Mattfeld went over credit scores, credit cards and general financial practices.

The small group gathered around Mattfeld as she dispensed knowledge about the sometimes complicated world of credit. Everyone one has a credit card...or three. According to Mattfeld, credit cards are a good way to start building credit but shouldn't be used as a financial crutch. Mattfeld started her presentation by explaining how new credit will result in a lower score than what may be desired. She encouraged members of the group to embrace secured credit cards to aid in credit growth. These starter credit cards can be loaded with funds and pose a low risk. She went on to explain that paying off the card each month is an excellent way of keeping credit in check will boosting scores.

Many in attendance were searching for information on how to build that three-digit number that so many obsess over. Mattfeld said the top three components of building a healthy score are: keeping credit card balances at half or lower, paying bills on time, and not overextending.

Building good credit isn't difficult but does require time investment and persistence. Several months of diligent payments can have a very positive effect on scores. However, nonpayment or financial negligence can have long lasting ramifications in terms of credit, this can make purchasing a home or vehicle an unpleasant process. Mattfeld has observed scores drop by 100 points for 30-day late payments, a huge blow for someone wanting to buy a house or start a business.

Maintaining a good balance of half or less on a credit card shows financial stability, which helps scores soar. Amounts owed accounts for 30 percent of a credit score. Additionally, payment history represents 35 percent of a score according to Mattfeld.

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For all the conveniences that credit cards provide, they can be equally damaging. "Too many people depend upon credit cards," said Mattfeld. Getting a credit card is relatively easy, only a few electronic forms stand between an ordinary person and thousands of dollars of alloted credit. Mattfeld isn't a fan of multiple cards and high balances, even stating that she's called her own credit card company to have her limit lowered. Having such a high balance poses the risk for overextension. She also revealed that having more credit available makes a person more susceptible to hacking and theft. She encouraged attendees not to have too many accounts and don't open credit accounts you don't plan on using. People often fall prey to this when opening store specific charge cards.

Mattfeld also teaches a finance course at Perham High school. She typically hears people exclaim how they wished they had learned about credit in high school. She provides that course and holds information sessions to fill in the blanks for people that may not have received such crucial information.

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Mattfeld has been in the banking industry for 25 years. Michael Denny/Perham Focus

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