Why Good Credit Is Important?

Dear Reader,

I am Robin Romano, the CEO of MariSol Federal Credit Union, the only credit union in Maricopa County that is a Community Development Financial Institution. What does that mean? MariSol Federal Credit Union is committed to financial inclusion and empowerment by expanding access to affordable and equitable financial services for all.

Financial education is one pathway for financial empowerment so today I would like to discuss why is good credit important?

Number one reason – YOU PAY LESS WHEN YOU PAY YOUR BILLS ON TIME! People who have good credit scores pay less when they borrow money.

Borrower D pays $8,099.70 more than Borrower A. Why? Borrower A has a proven track record of paying bills on time and using credit wisely which gave her a credit score of 725. She is considered less of a risk than Borrower D. Lenders price their products based on risk and most use a credit score to determine the rate of interest that you pay. Some financial institutions and even mortgage lenders use a credit score as a factor in their underwriting. Every lender is different so ask how your credit score is used.

A credit score normally means the FICO score developed by Fair Isaac Corporation. It is the most commonly used scoring system. FICO scores range from a low of 300 to a high of 850. There are differing models within FICO and it is a complex algebraic algorithm but in general, here is how your score is weighted based on what is on your credit report:

At MariSol, we will give you a copy of the credit report we pull. At any financial institution, they should be willing to discuss the report with you and advise you how to repair your credit. If not, then consider another place to borrower money.

The Fair and Accurate Credit Transactions Act (FACT Act) enables you to obtain a free copy of your credit report once a year. For detailed information contact the Federal Trade Commission (FTC) at www.ftc.gov or at 1-877-382-4357.

Article written by CEO, Robin Romano

Click here for more articles

About the Author