Understanding credit basics is a critical step on the path to financial success. Credit scores may seem like just a number, but they can make or break you in multiple ways. That’s why we gathered information about credit basics, so you can start off on the right foot or turn your credit score around for the better.
The three credit reporting bureaus are Equifax, Experian, and TransUnion. It is important to request a free credit report from each of these bureaus once a year to ensure accuracy. This can be done at www.annualcreditreport.com. Your credit reports will show your personal information, credit information and history, public record information, and a list of creditors and agencies who have requested your credit report. Review the details in your credit report to ensure that they are accurate and there hasn’t been any fraudulent activity. If there are new accounts opened in your name or other fraudulent activity, report them right away.
How Credit Scores are Calculated
Credit scores are a forecast of how well you will repay a loan as agreed during the next 24 months. It is a snapshot of your credit history at a particular point in time and only includes factors related to an individual’s credit. Credit scores range from 300 to 850. Your credit score is always changing, but the higher the score, the better the forecast that you will repay.
Why Credit Scores are Important
Credit scores determine whether or not you are approved for a car loan, personal loan, mortgage, or credit card. They also determine the interest rate or APR attached to these loans. In other words, having a good credit score can save you a lot of money in the long run. Credit scores also determine the cost of homeowner’s insurance and car insurance. If you have a poor credit score, you will have to pay higher premiums than if you have a good credit score. Also, credit scores can determine whether or not you will receive a job offer from a potential employer. A high credit score shows employers that you are stable and you are less likely to stress about finances.
If you are ready to start building your credit, contact the U of I Community Credit Union. We offer the official credit card of the University of Illinois and want to help you reach your financial goals. Learn more about the Illini VISA and our rewards option here.