What is a Credit Score and Why is it So Important?

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Posted On: July 19, 2022 by Peoples Bank of Kankakee County in: Personal Finances Saving

What is a Credit Score and Why is it So Important?

We’ve all heard that a good credit score is important. But what is it and why is it so important? Take a few minutes to increase your knowledge and understand what it takes to build a good credit score.

What is a Credit Score?

A credit score is a 3-digit number between 300 and 850. It is a number that lenders use to help them predict how likely it is that they will be repaid on time if they give a person a loan or credit card. Your personal credit score is based upon your credit history and can change when new information is reported to the credit bureaus.

What Does Your Credit Score Impact?

Your credit score is important because it impacts your financial life and determines whether you qualify for a mortgage, credit card, or other type of loan. It affects the interest rate you are charged and the credit limit you are given. A credit score may also influence a deposit you may be required to make on things like utilities, phone services, rental properties, and more. Lenders, insurance agents, and landlords typically run a credit check before considering your application.

What Do You Want Your Credit Score to Look Like?

A high credit score is considered good and more worthy of consideration. An excellent score ranges from 800 to 850 with a poor score at 300 to 579. The middle range (580 – 799) is considered fair to very good.

You may be wondering, what if you do not have a credit score? Not having a credit score means you have never opened a credit account, like a loan or credit card. Having no credit score puts you in a similar predicament as having bad credit because you are not able to prove to lenders that you are reliable. It is important for everyone to work towards building a good credit score.

What Impacts Your Credit Score?

Your credit score is impacted by five main factors: payment history, total amount owed, length of credit history, types of credit, and new credit you’ve recently opened. Payment history is the most important ingredient in credit scoring. Even one missed payment can negatively impact your score.

How to Build a Good Credit Score

Since it’s important to have a good credit score, let’s look at ways to build just that:

1. Pay your bills on time – On time payments for six months will positively affect your score.

2. Use a credit card – Start with one credit card and carefully avoid the mistake of opening too many and accumulating large balances. Too many inquiries into your credit and too many available credit cards can negatively affect your credit score. Remember that payment history is the most important part of your credit score, so consistently paying your balances on time improves your credit score.

3. Don’t close your credit card account – Stop using a credit card rather than closing it to avoid negatively impacting your score.

4. Only use some of your available credit – Credit is not a green light to go out and spend wildly. Only buy things you can afford to pay back within a reasonable timeframe. The key to a good credit score is discipline.

5. Monitor your credit score on a regular basis – You are entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com.

As you can see, there are many benefits to having a good credit score. The rewards you will reap include approved loans, better car insurance rates, lower credit card interest, and more housing options. A good credit score allows you to do the things you wish financially. If you have questions about credit score or wish to speak with a member of the Peoples Bank lending team, feel free to contact us here.

An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway. We can cover your overdrafts in two different ways:

We have standard overdraft practices that are available after your account has been open for 30 days and as long as you maintain your account in good standing.
We also offer an overdraft protection plan, Overdraft Protection Sweep, a link to a savings account. It may be less expensive than our standard overdraft practices. To learn more, ask us about this plan.

This notice explains our standard overdraft practices.

What are the standard overdraft practices that come with my account?

After your account has been open for 30 days and as long as you maintain your account in good standing, we do authorize and pay overdrafts for the following types of transactions:

Checks and other transactions made using your checking account number
Automatic bill payments

We do not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below):

ATM transactions
Everyday debit card transactions

We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction.

If we do not authorize and pay an overdraft, your transaction will be declined.

What fees will I be charged if Peoples Bank of Kankakee County pays my overdraft?

Under our standard overdraft practices:

We will charge you a fee of up to $30 each time we pay an overdraft.
The maximum daily overdraft fee per presentment or item paid using the Overdraft Reserve Program is $150.00 per day.
No per item handling fee will be charged on de minimis overdrafts. De minimis overdraft for this policy means transactions that overdraw your account by $30 or less.
There is an overdraft fee of $5 per day that will be charged beginning the 4th consecutive business day your account is overdrawn.

Nonsufficient funds (NSF) fees - if an item drafted by you (such as a check) or a transaction you set up (such as a preauthorized transfer) is presented for payment in an amount that is more than the amount of money in your account and we decide not to pay the item or transaction, you agree that we can charge you an NSF fee for returning the payment. Be aware that such an item or payment may be presented multiple times by the merchant or other payee until it is paid, and that we do not monitor or control the number of times a transaction is presented for payment. You agree that we may charge you an NSF fee each time a payment is presented if the amount of money in your account is not sufficient to cover the payment, regardless of the number of times the payment is presented.

PAYMENT ORDER OF ITEMS - The law permits us to pay items drawn on your account in any order (for purposes of this section "items" means checks, orders and electronic transactions). To assist you in handling your account with us, we are providing you with the following information regarding how we process those items. When processing checks and orders drawn on your account our policy is to pay lower numbered checks and orders in numerical sequence, but electronic transactions are paid first in the order received. The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented. There is no policy that is favorable in every instance. If the smallest items are paid first, you may have fewer NSF or overdraft fees, but the largest, and perhaps more important items (such as rent or mortgage payments) might not be paid. However, if the largest items are paid first, your most important items might be paid but it may increase the overdraft or NSF fees if funds are not available to pay all of the items. We think our policy attains a reasonable balance between minimizing additional costs to you and paying your more important items. We encourage you to make careful records and practice good account management. This will help you to avoid creating items without sufficient funds and incurring the resulting fees.

What if I want Peoples Bank of Kankakee County to authorize and pay overdrafts on my ATM and everyday debit card transactions?

If you also want us to authorize and pay overdrafts on ATM and everyday debit card transactions after your account has been open for 30 days, you may opt in.

You have an ongoing right to change this consent at any time. If your overdraft privilege has been revoked for any reason, the opt-in or opt-out selection may not apply. Please contact your nearest office for more information.

Alternate ways to Opt In/Out or make changes:

By Phone. Our Customer Care Representatives can be reached at 815-936-7600.
By Mail. Peoples Bank of Kankakee County, 333 E. Court Street, Kankakee, IL 60901
In Person. Please visit your local office and ask a representative to help you decide which plan is best for you.