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Building a Better Credit Report - Part 2

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Why is My Credit Score Vital to My Financial Health?

Insurance companies, property management companies, employers, and financial institutions evaluate credit scores to determine loan eligibility, interest rates, deposit amounts, and premium price. A credit score is a numerical rating earned by every consumer, and falls within a range between 300 and 850.

Financial & Quality of Life Consequences.

1.) Consumers with low credit scores pay more for a product or service. Consumers with low credit scores pay higher loan interest rates, which increases the total cost of their loan. A 30-year mortgage on a home valued at $100,000, with an interest rate of 5.0% has a $536.82 monthly payment. Total interest amortized over 30 years equals $93,255.78. Total interest added to the original price of $100,000, equates to an  actual cost of $193,255.78. Compare a 30-year mortgage on the same $100,000 home with an 8.0% interest rate. The monthly mortgage payment is $733.76 and the total interest paid is $164,155.25. Add total interest to original price and the actual cost of the home, is $264,155. Utilities Employees Credit Union provides a tool for you to calculate the cost of credit at

http://www.uecu.org/Loan%20Calculators

2.) Consumers with low credit scores are often denied for credit. Poor credit can prevent a consumer from qualifying for a loan. This can negatively influence quality of life. For example, a consumer is trying to improve their financial situation by gaining new employment that offers higher wages and enhanced benefits, but the distance requires a car. The location is outside the public transportation district. Consumer is denied for an auto loan making it difficult to find an affordable solution to accept the position.

3.) Consumers with low credit scores are either denied for rentals or larger deposits are required. Property management companies review credit reports to determine rental eligibility. Credit reports that list delinquencies and unpaid debt result in denials, again negatively influencing quality of life. When the credit score is low, property owners stipulate a higher security deposit. Utility companies may require higher deposits for telephone, electricity, and natural gas services. Some auto insurance companies base premium rates on credit scores.

Solid credit scores provide many financial and quality of life benefits. Let UECU help guide you!