So, what is a credit score, really? The answer is simple! Well, maybe it's not that simple. It's actually a complex mathematical equation that predicts your ability to repay a loan from a lender. Lending decisions are based mostly on your credit score, which will not only set your interest rate but also your approval or denial for a loan. Michele explains the whole process and what you can do to improve your credit score in our latest video!
What Is A Credit Score?
Credit scores range anywhere between 450 and 850. The higher the score, the better your credit. For example, an individual seeking a credit union auto loan at Telcoe with a credit score of 750 or higher could receive an interest rate of 1.99% APR, while an individual with a credit score below 600 could receive an interest rate between 9 and 13%.
Do credit scores matter when it comes to the amount you owe on your loan? Absolutely! An interest rate can change your monthly payment by as much as $100 per month, as interest accrues. As a result, you'll wind up paying a lot more simply for not managing your credit.
How Do I Find My Credit Score?
What's the easiest way to find your credit score? Well, if you're considering a loan from Telcoe, we can run those numbers for you and will actually provide you with a copy of your credit report. However, if you want to check on your credit without a lender being involved, we recommend www.creditkarma.com; it will provide you with a score that's very close to the score we would use here at Telcoe. Also, another site you can reference if you discover that you need to dispute anything on your credit report is www.transunion.com/dispute. Here, you can dispute any item you see on your credit report, and you'll even receive an email back when they've been removed or additional notice that a change has been noted, generally within 5 to 7 days.
How Do I Raise My Credit Score?
We're asked all the time how our members can raise their credit scores, and the number one tip we can give is that you should always pay your bills on time. On a credit report, on time means that you were not any more than 30 days late on any given payment. Another tip for credit card holders is to always keep your balances low. In fact, if you never let the balance on your credit card be above 40 to 50% of your limit, then you'll have a stronger credit score. Also, don't open too many cards in a short period of time or even have too many cards open all together. Try to keep the total number of credit cards you own to fewer than four - and always, always monitor your interest rates and make sure you never pay an annual fee.
Here at Telcoe Federal Credit Union, we're a local credit union willing to help our members with everything involving their credit scores and credit reports. If you're ready to build credit or reestablish credit, we offer credit union loans, including a credit builder loan or a secured credit card, that can help you do just that! For more information, visit www.telcoe.com or contact us at (501) 375-5321.