Credit. We hear the word often but the idea of it is still mysterious to some. What does bad credit mean and how can you change your score? How can you build credit? Why can’t you qualify for the best loans and interest rates? Fortunately, Industrial Credit Union offers free educational services to help answer these questions, coach you through your specific needs and teach the facts about credit.
“We’re here to help people,” said Chris Juchmes, supervisor of the Fred Meyer Branch of Industrial Credit Union. “That is really our main motivation for why we are here – to educate, put them in a better position and offer products and services to help them. I can only imagine the amount of anxiety hanging over your head when you don’t understand what is happening.”
A bad situation can get worse quickly in the credit world and it can be difficult to know where to turn or who to talk to. If you get injured and can’t work, you suddenly may have high medical bills, no income and a rapidly depleting savings account. Before you know it, you have lost your possessions and are deep in debt.
“I think, and it isn’t always the case, that people have a hard time asking for help when things come up,” Chris offers. “The best thing to do is to reach out as soon as you can’t pay a bill. There can be modifications, like lowering bill amounts, if you are ever in a situation. It is important to get ahold of someone before it is too late. If you are three months late on a car payment there are limited options but if you call that first month, people are able to do more to help.”
“Industrial Credit Union offers loans and savings, but also free financial counseling for members. If someone is having a hard time making ends meet, people are here to help make that situation better. I’m fortunate here because my boss, and my boss’s boss, are here to help put people in a better financial situation. We are looking at our products and services to help put them in a better place. We are here to help. We are not an organization built on profit.”
In Chris’ work, he sees many clients who have lost hope that they can fix their credit. He has noticed that, “People get overwhelmed and don’t do anything to take care of [their credit] because they think once their credit is ruined, it’s ruined. That isn’t true. It takes conscious effort to repair it but all hope is not lost and your credit is fixable.”
Chris provides a variety of services with Industrial Credit Union including lending money, setting up new accounts and taking care of problems in the branch. He started as a teller, then worked in collections and now is in loans, creating a well-rounded view of both sides of credit. He knows what it is like to call someone who has not been paying their bills and he knows what it is like to help someone recover after getting to the point of collections. “I take the most enjoyment out of helping people who had a bump in the road that set them in a spiral where their credit was damaged,” he explains. “People get embarrassed and stressed out and don’t have the tools to repair or fix it. People don’t know what to do so they just ignore it and hope it goes away. For me, it’s great when people come in looking to rebuild their credit and be in a better position. Sometimes we can get them a loan to help them or sometimes it’s simply education. It is really rewarding to help people out. There is so much satisfaction and pride when people can go out on their own and grow. They see where the hard work is going with their credit score rising and qualifying for better loans.”
I personally remember the recent financial crises. Many people lost jobs, homes and savings, finding themselves in dire situations. This has caused younger generations to be understandably hesitant with credit. Watching your friends and family hurt from borrowing and being unable to repay has made them generally more financially conservative. However, while abusing credit can happen and cause problems, credit used right can be a positive tool that helps them. Lack of credit means that you can’t show a bank or lender that you are responsible with payments if and when you need a loan later on.
Industrial Credit Union’s “all about credit” page says, “Credit is the ability to make payments for something over time, such as a car, education or house. Because most people don’t have enough money saved to pay cash up-front for these items, it is necessary to use credit to spread the cost out over time.” Rather than fearing credit, or over-using credit, it is there to help you reach your goals sooner and to ease the burden of the cost.
Your credit score is a number that tells banks and lenders how responsible you have been in the past with your borrowed money. Chris put it this way, “Credit is a mysterious thing to most people – there is this number assigned to you and that is that. It’s not just an arbitrary number, though; your payment history, balances on credit cards, the percentage of your total available credit being used, etc. tell us how risky it is for us to lend you money and how likely it is that you will pay us back. It doesn’t take in to account your situation, but is simply raw data plugged into an algorithm.”
Understanding what goes into that credit score may prove to be useful knowledge in building up your score. “Your credit score can mean the difference between being denied or approved for credit, and a low or high interest rate,” Chris explains. “A good score can help you qualify for an apartment rental and even help you get utilities connected without a deposit.” Factors that go into credit are your payment history, amounts owed, length of history, types of credit used and new credit pursuits. Your payment history, which includes missed payments, is a large chunk of what determines your credit score.”
If you find yourself without credit, or with low credit, you may be very eager to build up your score. This can be one of the more confusing and dangerous aspects of credit. “You need to be careful when applying for any type of loan – that you can trust the company you’re entering into an agreement with,” Chris relates. Rather than apply for lots of credit cards all at once, which may not be the best idea for building credit, you may want to consider a credit builder loan, establishing a secured loan or simply continuing to pay your current debt on time and in full each month. As the Industrial Credit Union website advises, “When it comes to credit, time is on your side – make your payments on time, every single month and you’ll start seeing positive increases in your score.”
For more answers or for insight to your personal financial position, feel free to take advantage of the many online resources provided by Industrial Credit Union, or stop in for that free financial counseling.