EDITORIAL: Good credit scores can open life’s doors

Jan. 11--You have to give them credit. Well, actually, you don't because when Tim Kaminski and Ashley Miller were ready to open Nutri-Fuel Smoothies and Supplements, their good credit helped them get the loan they needed to get started.

Their story, which appeared in the Advocate Business Report on Jan. 2, is sadly the exception to the rule in Victoria. According to an end-of-year-study by the credit reporting group Experian, Victoria is one of four cities in a study of 211 where the average credit score has not increased since last year. Victoria's credit score of 653 ranks 169th in the study, down 16 spots from last year.

Are you above or below the average? Do you even know? Even if you're not seeking to take out a loan for a new business like Kaminski and Miller, good credit can be a deal-breaker when it comes to things like renting an apartment, getting a mortgage on a house, getting a good rate on a loan or being able to take out a loan at all. Those three little numbers can have a big impact on your life, so it's important to understand steps you can take to keep your credit score up.

Late payments can have a negative impact on your credit score, so it's important to manage your loans so that your payments aren't more than you're able to make. In particular, avoid predatory "payday loans" and other high-interest loans that will set you up for failure.

Lenders that don't take your credit into account should send up a red flag. If they don't care about your credit, they don't care whether you can pay the loan back or not.

Credit card debt can bring a credit score down, while paying it off will bring your score back up. Even if you're able to make payments, consistently being in debt is bad for your score. Debt may be hard to avoid sometimes, but it should never be part of a long-term financial plan.

Lastly, remember that life is unpredictable. You may take out a loan or set up a payment plan with confidence in your ability to pay, but if your financial situation changes (through a layoff, medical bills, etc.), you may find yourself saddled with payments that are suddenly much less achievable. So, no matter how much money you have, it pays to be careful with it.

Now that the bust is starting to turn around, we can hope 2017 will be a good year for Victoria to improve its economy and its credit scores. Careful financial planning and debt management are worth the benefits of having a good credit score.

This opinion reflects the views of the Victoria Advocate's editorial board.

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