All About Credit Scores

by Carmen Gonzalez

If you’re nearing the age of eighteen, then you’ve probably heard people talk about credit scores. But what is a credit score? How do you establish one? Why is it so important to have a good score? We don’t get taught these answers in school, but Centric is here to help. With over 50 team members who have become Certified Credit Union Financial Counselors, Centric ensures that everyone who wants to learn more about their credit score and financial situation can have a one-on-one conversation with someone who can help them Live Better. In this month’s podcast, we sat down with one of Centric’s Certified Credit Union Financial Counselors to talk about credit scores; and here are some of things she shared that everyone should know.

Credit scores are calculated by the credit bureaus to show lenders and companies that you are trustworthy when you apply for a loan or services. When you have a good credit score, you qualify for better terms and rates. This gives you buying power which allows you to get more of what you want and save money by paying less. If you need help improving your credit score, you can schedule an appointment with one of Centric’s Certified Credit Union Financial Counselors. If you have no credit score or just got out of bankruptcy, one option to improve your credit score is a credit builder loan. This loan allows you to establish payment history and is a low-risk loan for Centric because we lend you the cash to use as collateral and put it on hold until you pay off the loan. Once you have paid off the loan, you can use the money release to you to use as collateral again for a Share Secured VISA^® credit card. When following this action plan to establish a credit score, you create payment history and a mix of installment debt and revolving debt.

If your credit score is good but not great, you might need to do more than just pay your bills on time. While paying your bills on time does a lot to create a good credit score, you also need a good mix of debt. You can easily establish installment debt with a car loan, personal loan, and any other loan that has a set payment schedule. If you have a healthy amount of installment debt, opening a credit card can boost your credit score by creating new capacity for you. This capacity shows how responsible you are with your money because it increases your spending opportunities. Keeping your credit card balance low, keeps your capacity high, which in turns boosts your credit score. If you need to increase your revolving debt but don’t know how to wisely use a credit card, you can check out our November podcast and blog for tips.

As you learn more about credit scores and the habits that help you establish good credit history, you will need help putting some of the habits into practice. Centric’s Certified Credit Union Financial Counselors can help you come up with a plan specific to your financial situation to help you reach your financial goals and dreams. Whether you are starting from a blank slate or repairing past mistakes, there are ways to get your credit score where you need it so you can increase your buying power. When you increase your buying power, the path to homeownership, a new car, and financial stability is a lot smoother when you are willing to put in the work.