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From Personal Loans to Mortgages - How to Get the Best Rates with Good Credit

Find the Best Rates in Massachusetts and Rhode Island

Building good credit is an essential part of achieving your financial goals, especially when it comes to securing loans. Whether you're looking to buy a home, finance a car or make home improvements, having good credit can help you qualify for better loan rates and save money in the long run. It's not just about getting approved for a loan, but also about getting the best rates available. In this blog post, we'll explore how building credit can help you get better loan rates, and we'll highlight some of the loan and financial literacy options in Massachusetts and Rhode Island available through St. Anne's Credit Union.

When it comes to buying a home, having good credit can make all the difference in your mortgage rate. The mortgage rate is the interest rate charged on your home loan. The better your credit score, the lower your mortgage rate is likely to be, which can save you thousands of dollars over the life of your loan. St. Anne's Credit Union offers a range of mortgage options, including fixed-rate mortgages with terms of 30, 20, 15, or 10 years, as well as jumbo mortgages, construction mortgages, and adjustable-rate mortgages (ARMs).

Similarly, if you're looking to finance a car, having good credit can help you qualify for lower interest rates on car loans. St. Anne's Credit Union offers both new auto loans and used auto loans. Additionally, we offer personal loans and unsecured loans for a variety of purposes, including home improvement loans and Mass Save® HEAT Loans for energy-efficient upgrades to your home.

Know your credit score

Knowing your credit score is an essential first step in building good credit. Your credit score is a numerical representation of your creditworthiness, and it's used by lenders, banks, credit unions and other financial institutions to evaluate your creditworthiness when you apply for a loan or credit card.

Here are some tips on how to know your credit score:

  1. Check your credit report: Your credit report is a detailed record of your credit history, including your payment history, account balances and credit inquiries. You can request a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion) once a year. Reviewing your credit report is an important step in understanding your credit score.
  2. Use a credit monitoring service: Many credit monitoring services offer free credit score tracking and alerts when there are changes to your credit report. These services can help you keep track of your credit score and monitor for fraudulent activity. To avoid negatively impacting your credit score, it's important to be selective about the credit accounts you apply for and only apply when you need credit. If you're shopping around for loans, try to do it within a short period of time to minimize the impact on your credit score. Additionally, consider monitoring your credit score and credit report regularly to ensure that there are no errors or fraudulent accounts that could impact your credit score.
  3. Get your credit score from a credit bureau: You can also get your credit score directly from one of the three major credit bureaus.

Knowing your credit score is an important part of building good credit. By checking your credit report, using a credit monitoring service or getting your credit score from a credit bureau can help you stay on top of your credit score and take steps to improve it over time.

Pay your bills on time

Paying your bills on time is one of the most important factors in building good credit. Your payment history makes up 35 percent of your Fair Isaac Corporation (FICO®) credit score, which is the most commonly used credit scoring model. Making on-time payments demonstrates to lenders and credit bureaus that you are a responsible borrower, which can improve your credit score and increase your chances of being approved for loans like mortgages, personal loans, car loans and credit cards with favorable terms.

Late payments can have a significant negative impact on your credit score, and missed payments can remain on your credit report for up to seven years. A single late payment can lower your credit score by as much as 100 points, depending on your starting score. This can make it more difficult to get approved for loans and credit cards, and this can also result in higher interest rates and fees.

To avoid late payments, it's important to stay on top of your bills and payment due dates. Set up automatic payments or reminders to ensure that you pay your bills on time each month. If you do miss a payment, try to catch up as soon as possible and make sure to continue making on-time payments going forward.

Keep your credit card balances low

Keeping your credit card balances low is another important factor in improving your credit score. Your credit utilization ratio, or the amount of credit you're using compared to your credit limit, makes up 30 percent of your FICO® credit score. Banks, credit unions and credit bureaus look at your credit utilization ratio to evaluate your creditworthiness and your ability to manage your credit responsibly.

It's recommended that you keep your credit utilization ratio below 30 percent, meaning you should aim to use no more than 30 percent of your available credit at any given time. If you have a credit limit of $10,000, for example, you should try to keep your balance below $3,000.

To keep your credit card balances low, you should aim to pay your balance in full each month or at least make the minimum payment by the due date. If you're carrying a balance, try to pay more than the minimum payment to pay down your debt faster and reduce your credit utilization ratio. Also paying down the higher interest rate first will help you pay down debt faster. Additionally, you can consider asking your credit card issuer to increase your credit limit, which can lower your credit utilization ratio as long as you don't increase your spending.

Build a credit history

It can be tempting to avoid credit accounts altogether in the hopes of avoiding unmanageable debt, but that can actually hurt your credit score because you won’t have a credit history to go off of, which can cause issues when you need to borrow money to buy a home or vehicle.

If you're just starting out, you may not have much of a credit history yet. However, applying for a secured credit card or loan with a co-signer can help you establish credit and build a positive payment history.

A secured credit card requires a security deposit, which is used as collateral. The deposit amount typically becomes your credit limit, and you can use the card like any other credit card. By making on-time payments and keeping your credit balances low, you can establish a positive credit history and increase your chances of being approved for unsecured loans in the future.

Don't open too many new accounts

Applying for too many credit accounts in a short period of time can negatively impact your credit score. Every time you apply for credit, a hard inquiry is made on your credit report, which can lower your credit score. Consequently, if you apply for multiple credit accounts in a short period of time, it can signal to lenders that you may be a riskier borrower, which can lower your credit score even more.

Additionally, each new credit account you open will lower the average age of your credit accounts, which can also negatively impact your credit score. Credit scoring models look at the length of your credit history, and a shorter credit history can be seen as less favorable.

However, it's important to note that not all inquiries have the same impact on your credit score. For example, if you're shopping around for a mortgage or auto loan, multiple inquiries within a short period of time are typically treated as a single inquiry. On the other hand, if you're applying for multiple credit cards or personal loans in a short period of time, each inquiry may be counted separately.


Learn from local lending experts

If your credit isn’t quite where you want it right now, St. Anne’s not only offers a variety of loan and line of credit products to people living in Eastern and SouthCoast Massachusetts and Rhode Island, but we also host Virtual Understanding and Improving Credit Scores Seminars every month! This free financial literacy seminar is designed to help you understand your credit score, improve your credit and develop a solid credit history, and it can be taken anywhere you have internet access. The seminar covers a range of topics, including budgeting, credit reports, credit scores and more to help you qualify for the best possible loan terms. It's a great opportunity to learn from experts and connect with other individuals who are also working to build their credit.

Building good credit takes time and effort, but it's worth it. Following these tips and considering attending St. Anne's Monthly Virtual Understanding and Improving Credit Scores Seminar are great ways to get on the right track. With a little patience and perseverance, you can improve your credit and achieve your financial goals.

Save your seat for our Virtual Understanding and Improving Credit Scores Seminar today and get ready to level up your credit!

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