CREDIT SCORES AND YOU

When you apply for a loan, for anything from a vehicle to a new home, most lenders look at your credit score to help decide whether they're comfortable lending you money. Your score can give them greater confidence that you're likely to repay them in a timely fashion - or it may convince them that it's a risk they'd rather not take.

Even if you are approved for a loan, the interest rate you pay is likely to depend in part on your credit history. Those with excellent scores generally pay much lower interest rates than those with average numbers. And people who score on the lower end of the "approvable" scale wind up paying higher rates. That's simply a premium that lenders charge for the additional risk they incur when they lend to people with more unsteady track records.

That's one of the most important things to remember when it comes to credit: scores are based in large part on your financial history. Things like how much debt you currently have and how well you've repaid loans in the past can make the difference between a "Yes" or a "No," and hundreds or thousands of dollars in additional interest.

Fortunately for those with less than perfect scores, these numbers can change over time, as your spending, saving and repayment behavior changes. If your score is lower than you would like - or lower than lenders would like - there are things you can do to improve it.

Visit How SAFCo Can Help for more information.