“Neither a borrower nor a lender be,” as old Polonius says in Shakespeare’s “Hamlet.” True? Not necessarily. The fact is that credit, when managed responsibly, plays a vital role in helping Americans to build wealth and achieve financial independence.
Unfortunately, many Americans admit they don’t always understand the world of credit and how it works. Mention credit scores, interest rates and loan terms and their eyes may just glaze over.
But a new public education initiative launched by Wells Fargo Bank wants to change how you think about credit—by showing how borrowing can be a powerful tool for building wealth and securing your financial self-sufficiency, if used responsibly and with care.
Wells Fargo launched the “Path to Good Credit” website in February as a platform to help consumers better understand how to build and use credit. With videos, interactive quizzes, consumer tips and plenty of facts, the site serves to dispel a lot of the myths surrounding credit, and helps users to better understand how credit works. (There is also a companion site for Spanish language users.)
“Understanding how to manage credit is an important ingredient in economic self-sufficiency and success,” said Gary Korotzer, an executive vice president in Wells Fargo’s Consumer Credit Solutions Group. “We want to provide our customers with an informative and engaging experience that can help them chart a path to better credit.”
Visitors to the Path to Good Credit site can explore:
- Explanations about why good credit matters
- A game plan for how to build a solid credit record
- Tips on rebuilding credit for those who have gotten off track
- Explanations of how credit reports function, with links for getting your own credit report, and more
And according to recent polls, it’s a timely undertaking. According to Wells’ Fargo’s annual “How America Buys and Borrows” survey conducted by the Ipsos market research firm and published in December 2014, 78% of Americans say they want to learn how to manage their money better.
While most Americans understand the concept of credit, that doesn’t mean that they always know how to use it responsibly. According to the Ipsos survey, close to 40% say they are not fully confident they know enough to make good decisions about borrowing.
“Our survey shows consumers have a real desire to continue learning the skills needed to achieve their financial goals,” added Korotzer. “More than three-quarters of respondents said they have an appetite to learn even more, which is encouraging because understanding how to manage money is the foundation of financial stability and success.”
Others may be conditioned to believe that “debt is bad.” But all debt is not necessarily created equal. Even the most conservative financial advisor may recognize that taking on a mortgage to buy a house, a student loan to pay for an education that opens the door to a rewarding career or a loan to start a business can be a positive step toward improving one’s long-term financial prospects.
But before taking on the responsibility of those debts, most Americans who may not have significant experience in the world of credit markets would do well to learn more about how they work. That’s where initiatives like the Path to Good Credit site can pay dividends for you and your family.
The Path to Good Credit is the latest in a growing body of educational initiatives from both financial institutions and non-profit organizations with the aim of helping American consumers to develop higher levels of financial literacy.
In recent weeks, Project Invested has highlighted the Better Money Habits partnership between Bank of America and the Khan Academy online learning site, as well as the America Saves Week initiativeto promote better savings habits. With April designated by the White House as “Financial Capability Month,” these sites and others can be helpful resources for learning more about how to navigate the world of personal finance.