Why is credit so important?

You pay your bills on time, watch your balances, and finally paid off your credit card debt. Is all of this reflected on your credit report? Have you reviewed it recently to see if there are items that have no business being there? You should.

We recommend checking your credit report annually because whatever shows up in your history can influence many things that affect your daily life…

• the interest rate you get on an auto, home or personal loan
• employment opportunities
• your car and/or home owners insurance rate
• deposits on your utility accounts
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Why your credit score matters.

To put it simply, the higher your credit score, the more money you will save. A poor credit score can create potholes and pitfalls on your path to financial health. Over the life of a single loan, your credit score can either save you thousands of dollars or cause you to pay much more in interest charges. So it’s important that you manage your credit score closely.

For example, a $20,000 car loan at a 2.49% interest rate will have a $355 a month payment and have $1,300 in interest, however, if the interest rate is 15% the monthly payment will be $476 and the total interest will be $8,500.

Access your free credit report.

It’s critical that you understand how to read your credit report, how credit scoring works, and how to manage your credit score. You can access your credit report for free in one of two ways:

1. Obtain one free credit report per year from each of the three credit bureaus --- Experian, Equifax and Trans Union. Access your free reports at www.annualcreditreport.com. The reports are free, but expect to pay about $7-12 (depending on the bureau) if you want to see your credit score.
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Credit scores and reports 101.

Knowing the basics of credit reports and credit scores shouldn't be hard. The resources below offer a further understanding of the nuances of credit and what steps you can take to improve yours.