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Lu Fan PhD, CFP® Quoted in WalletHub

Lu FanDr. Lu Fan, Assistant Professor in the Department of Personal Financial Planning, was featured in WalletHub’s recent piece about 2021’s Cities with the Highest & Lowest Credit Scores.

What are some commonly held misperceptions about how credit scores are calculated?

One common misperception about credit score calculation is that the belief that holding debit or prepaid cards could increase credit scores. For FICO score calculation, however, the five main factors determining one’s credit score calculation include current debt, payment history, length of credit history, types of credit, and recent credit activities. Unfortunately, holding debit or prepaid cards does not contribute to credit score calculations.

Which are the most common mistakes people make when trying to improve their credit score?

Some people try to borrow from multiple credit cards (or spread out their debts across credit cards) to potentially reduce the impact on their credit score. In fact, it is very unlikely that their credit score can be improved by doing so because the total debt amount remains the same after summing up all debt from each credit card.

What is the best way for a young person to build credit?

Start to build credit history with timely and responsible payments can help young individuals to build and improve credit.

What are some strategies for people who are facing financial difficulties to protect their credit scores?

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