What is credit and how does it affect you?

    Credit history is important and affects all of us at some point in our lives. First of all, potential lenders review it to determine how likely you are to repay a new loan and how much effort will be required on their part - they don't want to devote time to reminding people to pay. When deciding whether or not to approve a loan, lenders factor in your credit worthiness and your potential risk. They generally take into consideration the following: how promptly and consistently you pay your bills; the amount and type of credit you have; how much you currently owe other creditors; your income; your employment history and your residence history.

    Did you know there are 190 million credit active people in the United States who have a charge account, car loan, student loan, personal loan or home mortgage? As people pay their bills, most lenders report their credit payment history information to credit bureaus. Therefore, most of the information contained in your consumer credit report comes directly from the companies with whom you do business.

    Since most lenders do not know you personally, the only way they can project what you will do in the future is to reflect on what you have done in the past. If you have established a consistent pattern of repaying your financial obligations, the lender is more likely to authorize a new loan - and at a lower interest rate. However, if you have experienced credit problems in the past, you may be charged a higher interest rate.

    Do not assume that you must have perfect credit in order to qualify for a loan. As a matter of fact, it is our goal to be able to offer our customers the best product possible. We offer a number of financial products tailored to meet the specific requirements of the individual.

    Maintaining a good credit rating is not easy if you are unaware of the types of information credit agencies track and evaluate. Follow these steps to maintain the best possible credit rating:

• Avoid bankruptcy. Declaring bankruptcy will adversely affect your credit rating for a number of years.
  
• Pay all of your bills on time. That means you must consistently pay at least the minimum amount due on all credit card, loan, and utility bills.
  
• Minimize outstanding balances. Avoid exhausting your maximum credit lines whenever possible. Do not run up large balances that result in sizable monthly payments. This will also enable you to maintain a buffer in case of emergencies.
  
• Optimize available credit. Having too much available credit can be a red flag on your credit history. Do not apply for every loan or credit card that is offered to you. Maintain a moderate number of accounts with reasonable lines of credit.
  
• Avoid lawsuits and judgments. Judgments against you will appear on your credit history. Avoid being sued, and try to avoid having a judgment filed against you. This will not only help to preserve your credit, but it will also simplify your life.
  
• Retain your job and your residence. Your credit rating may erode if you frequently change jobs or residences. Try to maintain a stable employment history, and avoid relocating more often than necessary.