Good credit and why it should matter to you
In the past, a credit score was sometimes looked at but didn’t really mean much, other than showing a creditor your payment history. Today, however, a credit score can be used for many things: job reviews, cell phone service, rental approvals, insurance rates, credit card approvals, loan approvals and loan rates.
Your credit score has a significant affect on the type of loan rate you receive.
Here’s a real life example comparing someone with a good credit score and someone with a bad credit score:
A member with a good credit score takes out a loan for $10,000. Because of their credit score, the rate they receive is 1.9%. The interest the member will pay over 5 years on that loan is $490.56. Another member takes out a $10,000 loan at the credit union but they do not have very good credit. The rate for that loan jumps to 10.9%. The interest the member with bad credit will pay over 5 years on the loan is $3,016.29. Imagine the difference that makes on an even larger loan, such as a mortgage!
What makes a credit score bad?
Everything gets reported to the credit bureau from mortgage payments to medical bills. Missing multiple payments, high debts and filing for bankruptcy are just a few of the factors that can affect your credit score. It’s a good idea to check your credit report once a year for fraud or any other activity that can harm your credit score.
How can a credit score improve?
It is very important to pay attention to your finances and make sure you are making all your payments timely. Credit unions offer free financial reviews that can reveal where your credit could be improved. Our staff will work with you to find solutions that fit your individual needs.
If you have questions about your credit report and your score, our staff would be more than happy to discuss this with you, go over the reasons for your score and help you to improve it in the future.