8.1.2023

Members:

When it comes to building credit, there is so much to learn. Individuals struggle with understanding how it all works and we want to help! This month, Skyline 101 is focused on helping you understand some basics so you can get a better general understanding.

Here are the basics of credit:

1. There's a score given to you, and guess what, everyone will start at zero! 
   1. The Scores ranges are:
      • A 739 to 850
      • B 680 to 719
      • C 630 to 679
      • D 600 to 629
      • E/F 599 and below
   2. The higher the score, the better for you.

How do I build credit?

• First and foremost, do NOT miss a payment or make a late payment. This has a major impact on your credit score. 
• If you apply for a credit card and get declined, do not go from lender to lender or store to store and keep applying for a credit card. This will hurt your credit score and prevent you from getting a approved.
• If you do get a credit card, utilize 20% of the lending limit. 
  • For example: Let's say you have a credit card with a maximum limit of $1,000. You should try to use the credit card, but keep your balance at or below $200 at all times. This will help your score increase and keep your monthly minimum payment at a reasonable and affordable amount. 
•  When you get an auto loan, don't go crazy! Apply for a reasonable amount. Auto loans are a major contributor to individuals being unable to pay back their debt. Once a person looks at their monthly payment, car insurance payment, and annual taxes (yes some states have that too) it becomes too costly and unaffordable. Reliable transportation does not mean going broke trying to look rich. 

What are the minium scores to get qualified for loans?

• A personal goal should be to get your credit up and above 640. 
• Mortgages typically have a minimum of 640, some have a 690 minimum.
• Auto loans will have lower minimums, perhaps in the 500's; however, rates are high, and if it's not at the credit union, you could be faced with rates like 22-30% interest. 
• Credit cards have lower minimums, some in the 400's so individuals can get started. The lower the score you have, the lower the maximum limit and likelihood of being approved. 

We hope you enjoyed this month's Skyline 101 article. A member advocate at Skyline Financial Federal Credit Union is always happy to discuss your finances and help you one on one. Feel free to call 203-755-2030 or email memberservice@skylineffcu.com to schedule an appointment! 

Yours in exchange,

James A. Higgins, MBA, CUDE

President and CEO