For many of us, credit can feel like a punishment, confusing, and beyond our control. If you are working to improve your score, it’s important to have information you can trust and to steer clear of places that can end up wasting your time and money and even land you deeper in debt. This article lays out some basics of credit. Next month, we’ll tackle some common myths about credit repair and rebuilding.

Do I need a good credit score?
First, let’s talk about what credit is for. Credit scores were originally developed to help lenders decide how much they can trust you to repay any “credit” extended to you, such as a loan, a credit card, or a mortgage, and they are still used primarily for that purpose. If you’re not planning to apply for a mortgage, a car loan, or other types of debt, you don’t necessarily need to pursue a good credit score. However, credit scores can also be used by other people trying to assess your reliability, such as a landlord or insurance provider. While this may or may not happen to you, achieving and maintaining a good credit score is generally recommended for everyone.

What about places that say No Credit, No Problem?
Loan products that do not require a credit check or that allow for bad credit or no credit often have excessively high interest rates, exorbitant fees, and other aggressive terms that can cost a lot of money and leave you trapped in a cycle of debt.

What is a good credit score?
Most credit scores range from 300-850. Credit scores above 670 are considered “Good,” with higher credit scores being rated as “Very Good” or “Exceptional.” Many mortgages require a minimum credit score of 640, but higher scores can get you better interest rates.

Can I monitor my own score?
Yes. Many banks and other institutions will give you a copy of your score for free. It’s important to understand that you do not have one single credit score. There are three main credit bureaus that collect your data and generate credit reports: Experian, Equifax, and TransUnion. There are also two types of scoring models: FICO and Vantage. Each of those types includes multiple scoring models for different purposes. The most common types are FICO 8 for credit cards and FICO 4 or 5 for mortgages. Ask one of our credit counselors how to get your FICO 8 scores from all three bureaus for free!

Where can I go to get help with my credit?
Catholic Charities of North Louisiana provides free, confidential credit counseling to help you reduce debt and increase your credit score. Our team of certified credit counselors is here to help you build or rebuild your credit to meet your financial goals. Give us a call at 318-865-0200 to get started!