Maybe it’s time to give yourself some credit

“Giving credit where credit is due.”

It’s a common phrase used to acknowledge someone for doing something well, or praising someone for a good quality they possess. For those of us in financial services, giving credit where it’s due is a year-round occurrence. Specifically, we provide access to lines of credit and opportunities to build, or rebuild, your credit score.

April is National Financial Literacy Month, an especially important time for people in my profession to highlight the importance of understanding your financial situation. Your credit standing — which measures your reputation for meeting financial obligations — plays a major part in that.

A good credit score opens up opportunities for you to achieve financial freedom. It not only provides you access to credit, but it also determines the interest rate you will be offered. A better credit score generally equates to better interest rates, and more favorable (lower) monthly payments. Your credit score and history can even factor into decisions about your insurance, and where you’re able to work or live.

Unfortunately, there are many in our communities who don’t have good credit, nor do they have the financial means to establish, repair or rebuild their credit score through traditional credit-building opportunities like purchasing a car, mortgaging a home or opening a credit card. And because good credit has such a major impact on your everyday life and decision-making, it’s critical that organizations in financial services — such as American Eagle Financial Credit Union — do what we can to help people pull themselves out of the regressive cycle that comes from a persistently low credit score.

Financial literacy is baked into our mission, and we are committed to helping people achieve good financial health and habits—like maintaining a solid reputation for meeting financial obligations.

Roughly a year ago, state Sen. Saud Anwar asked our local Hunger Action Team — in which American Eagle employees participate — to find ways to assist and accommodate households with limited financial resources. As we assessed this challenge and how we could put our mission into action, our team identified a major need in our community, and a way in which we could fill that gap and reach our goal of serving the underserved and underbanked. The result is a win-win opportunity for ALICE (Asset Limited, Income Constrained, Employed) households in the form of American Eagle’s new Credit-Builder Program.

The credit-builder program is an opportunity for those with no to low credit to establish, build or repair their credit score by making monthly payments — based entirely on what you can afford — to a 0 percent interest loan secured by a Certificate of Deposit, which is a type of savings account that earns interest.

The credit-builder loan is different from a traditional loan in that financial institution holds the amount borrowed in a CD, while the borrower makes fixed payments. The payments are reported to the credit bureaus each month, therefore building positive credit history for the customer. The borrower gains access to the loan amount, in addition to the interest earned from the CD, at the end of the term.

Plus, to promote and advance our financial literacy efforts, participants have the opportunity to receive a monetary bonus simply by taking part in financial education classes we offer year-round. For a small investment of time, they’ll learn about tips and tools that will help them make sound financial decisions — plus a nice bonus to help them get started on the path to financial freedom.

The Financial Education modules on our website are free, and accessible to anyone — membership is not required. They’re short, easy to follow, and in addition to Building Your Credit, there are an array of other topics for all ages including Adulting 101, Buying a Home, Car Shopping, Retirement Planning, Financial Caregiving & Elder Fraud, and more.

Financial Literacy Month is not only a celebration, but a challenge. This is your opportunity to review your finances and gradually improve them — and there’s no better time to start than now. Join us in celebrating National Financial Literacy Month, and get started on your path to financial freedom.