The Importance of Keeping a Good Credit Score
March is National Credit Education Month, which is a good time to brush up on your finance skills and check your credit score. If you don’t already, making a regular habit of checking your credit score is important to ensure your identity is protected. If you’re not sure what your credit score is, or why it’s important, here are some reasons why it’s important to maintain good credit.
Here are some factors that affect credit scores:
- The amount of debt you carry – Paying off the amount you charged to your credit card each month can increase your score over time. This shows you are reducing your debt gradually and are responsibly handling your debt.
- Age of credit history – When you have established, long-term credit lines, and continue to remain in good standing, this reflects that the individual has a reliable financial status.
- Late payments – It’s always better to pay early and on time. Late payments made on your credit card or loan, will be reflected on your credit report. Keep in mind to review your bank’s turn-around time for payments if you use their online banking system to make payments. Consider their delays and schedule payments accordingly to avoid any late payments or penalties.
- Hard credit inquiries – When considering a loan for a car or a house, each inquiry will be registered on your credit report. Although, with a proper credit standing, these shouldn’t have as big of an impact on your credit score.
- The number of accounts – Continuously opening and closing accounts can impact your credit score. Closing accounts can often have a huge hit on your credit score, even if the reason for closing is made from necessity.
Why is it important to monitor your credit score?
Credit Unions and other financial institutions utilize credit reporting agencies to verify whether an individual is credit-worthy, or if they are at higher credit risk. Individuals with higher credit scores are often offered lower interest rates and options, which can amount to hundreds to thousands of dollars in savings depending on the loan size. Those with a less appealing credit score are likely to see a much higher interest rate, which will ultimately result in paying more in the long run.
Another reason it’s important to monitor your credit score is to ensure your identity has not been tampered with or compromised. If you are regularly monitoring your credit score, it will be easier to spot and report to the credit bureaus.
UNCLE Credit Union members can regularly monitor their credit score using the credit score tool within digital banking. Credit scores are updated daily, with no impact on your credit history or report. To start monitoring your credit score, log into online banking at https://digital.unclecu.org/Authentication.