Credit can be a tricky topic. While there’s plenty of information out there about credit, how to build it, and what to do if it’s dragging down your home loan application, it’s still a confusing area for some people.
While there are plenty of experts available, the credit experts at Veterans United’s Lighthouse department are among the best and are available free-of-charge to help you through your credit issues. Get in touch today and start the road to great credit.
There’s also lots of great credit advice online: from the Veterans United Network, Smart Military Money and other bloggers. Here’s what they say is the number one thing that people misunderstand about credit.
Many young people and members of the military forget that their credit is used for so much more than simply qualifying for a loan. Your credit is a discriminating hiring factor for many companies now. The United States government uses it as one of the screening factors to determine who can have a security clearance.
It is also used by landlords, utility companies, and so many other businesses that we all have to work with day in and day out. While most of us are trying to get out of debt and minimize the need for a good credit score for new debt in the future, we often forget how much our credit worthiness plays a factor in other aspects of our lives.
Hank Coleman, Publisher and Lead Writer for Money Q&A
I think the most misunderstood thing about credit is that it’s not free money. It’s easy to trick yourself into thinking so, with 0 percent APRs and bonuses worth hundreds of dollars. As rewards credit cards grow in popularity, you can easily convince yourself that you’re making money by spending money. But credit has a price, whether you pay now or down the line.
John Gower, Senior Analyst for NerdWallet
I think Credit Scores are the most misunderstood aspect of credit. There are may different types of credit scores, even within the same credit score family. For example, the most commonly used credit score is the FICO credit score, but there are several variations of the FICO score, depending on what the borrowing is seeking a loan for and what the lender wants to see.
The Vantage Credit Score is another popular credit score, but uses a different scale than the FICO credit score. The most important thing for consumers to do is familiarize themselves with the different types of credit scores, and how the scores are determined. Based on what they have learned, they should work on improving the aspects of their credit history that will give them the most impact on improving their credit score.
Like in basic training when we were assigned roster numbers that were associated with everything (wall locker, ruck sack, helmet, weapon), our credit score has that same attachment to everything in our financial life. Our mortgage rate, life insurance rate, personal loan rate, and maybe even a future job. Your credit history affects everything and you shouldn’t ignore it.
Consumers don’t have a clear sense of what it takes to improve their credit. Part of it is because some “credit repair” companies prey on people and the confusion that often surrounds credit scores and credit reports. The reality is you don’t need to pay for credit repair. All you really need is education, some simple, concrete steps and determination.
Veterans, service members and military families can get that education — for free, of course — from the Lighthouse program at Veterans United. In the end, though, it’s ultimately up to the consumer to put in the work. Just know it’s something you can do yourself, and probably in a lot less time than you realize.
Chris Birk, VA Loans Insider and mortgage, real estate and military homebuying expert