It’s National Credit Education Month and we wanted to share why it is important to have good credit. In this blog, you will learn about the significance of a credit score and why you should try to improve it for the future.
Who Looks At Your Credit Score?
Financing is often needed for larger purchases. These items could include purchasing a home, getting a student loan, or purchasing an automobile. Anytime you need to take out a loan to buy something, your credit will be reviewed by the bank or entity lending you the money. There are other companies that might check your score as well.
Below are some establishments who would potentially check your credit score before helping you or doing business with you:
- Potential Creditors or Lenders
- Credit Card Issuers
- Auto Lenders
- Insurance Companies
- Prospective or Current Employer
- Government Agencies
- Debt Collectors
- Utility Services
- School Loan Providers
Why Do Credit Scores Matter?
The credit score is a three-digit number ranging from 350-850 that determines what your risk of not repaying the loan is as a borrower. On average, most people want to have 650 or above in order to qualify for the loan, credit card, or insurance you want. With a credit score above 650, you will typically be able to have access to better interest rates. Anything less than 650 can have a large impact on whether you are able to get credit, and if you do, it will likely be at a higher interest rate.
Once your credit score is checked, the lender can determine whether they want to take on “your risk”. The higher your score, the less of a risk you are to the lender. In contrast, the lower the score, the higher risk you are to them. With more risk, it means more costs and higher interest rates as a buffer.
Knowing the impact your credit score has on your future buying decisions is important. We want to help our members get the items they want and it helps by being informed. If you have any questions, feel free to speak with one of our Member Advisors, stop by our Montebello or Cerritos branch today, visit us online at caminofcu.org or give us a call at 800-835-3400.