By Belinda Collins, Vice President & Credit Analyst for First National Bank & Trust Co.

Your credit score — whether good or bad — speaks to your responsibility and character in repaying someone who has loaned you money. As a vice president and credit analyst for First National Bank & Trust Co., I help people repair poor credit scores and build up good credit. Before we begin the process, I recommend considering why a good credit score is important.

Loans and interest rates

Your credit score directly affects your ability to borrow money and your interest rate on that borrowed money. Loans are priced based on credit scores, and the higher your score, the lower your interest rate. A good credit score is direct proof you’re financially responsible and can be trusted to pay back a loan.

I’ve seen people in dire situations — they desperately need to repair the roof or replace an air conditioning unit in the dead of summer — be denied loans based on poor credit scores. Scores can range from 309 to 844, depending on the credit bureau. Scores in the lower range generally reflect a poor credit history and derogatory reports, such as late payments and public record filings.

The biggest financial mistakes you can make are not saving money or failing to plan for unexpected expenses and not taking care of your credit. If you have issues with one or both of these points, you might consider credit counseling.

Credit counseling can help

Through credit counseling, you receive advice on your money, debts and budgeting. When I meet with someone during a credit counseling session, I ask about monthly expenses — how much they dine out, how much they’re spending on entertainment, etc. — and will advise where they could cut back. For most people, the hardest part about managing money is discipline. You have to budget how much money is coming in and going out each month. Consider making a monthly savings deposit to yourself to cover unexpected expenses.

It also matters where and how a client receives a credit score. Services like Credit Karma make “soft pulls,” meaning it won’t count as a hit on your credit score. “Hard pulls” will show on your credit report when someone has pulled credit. If credit is pulled excessively, it can lower your score. Mortgage companies, banks, auto dealers and sometimes employers pull inquiries. Soft pulls often don’t take information like public records and bankruptcies into account, so they’re sometimes not as accurate.
I also ask about resources, equitable assets and collateral if a client is interested in securing a loan to help build credit.

Loans to improve credit

Two types of loans we might recommend are cash-secured loans and debt consolidation loans. One is for people experiencing financial hardship, while the other is for people trying to get out of debt. Both help improve credit scores if always paid on time.

Maybe you had a medical issue or needed financial assistance for college, and you haven’t been able to pay off loans or need higher credit. A cash-secured loan can help. With cash-secured loans, you deposit funds with your current bank; this deposit is then used to secure the loan. If you stop making payments on the loan, your lender will keep your deposit (or a portion of it) to pay off your loan with them. You’re borrowing against your savings in the bank, but the benefits over time can far outweigh the costs. I advised one of my clients to consider a cash-secured loan. Within a few years, their credit score increased to over 700, and they were able to buy a home on the secondary market.

Maybe you’re in deep credit card debt, and your minimum monthly payment is only going toward interest — you’re never able to chip away at the principal. A debt consolidation loan could help. These loans combine multiple balances from credit cards and other high-interest loans into a single loan with a fixed rate and term. Consolidation loans can help you save money by reducing your interest rate, pay off debt faster and possibly increase credit scores if always paid on time.

Credit cards: a catch-22

Speaking of credit cards — in my experience, they’re the top way to build or destroy your credit. Remember: a credit card is not free money. Don’t charge on the card unless you’re able to pay it off, and don’t use more than one or two cards because the balances can increase quickly.

Credit card statements, like most account statements, are calculated and mailed monthly. Some credit card users might forget how much they’ve charged and find themselves unable to pay the balance at the end of the month. I recommend holding on to receipts to keep track of credit card spending until the monthly bill is paid and continuing this practice as long as you use credit cards. This is also helpful when using debit cards, too. You should also be able to check your statement online or through an app to check spending more frequently.

At the same time, a credit card can help you build your credit. If you are comfortable, another suggestion is to set up an automatically withdrawn monthly payment from your bank account; however, you must make sure the funds are in the account when the autodraft hits, as this could cause a problem with your bank. The credit bureau will see there’s a balance but that the balance is being paid. Do this for a couple of years, and your credit could improve.

Talk to FNB, first

If you Google “credit counseling,” you’ll see results for all sorts of agencies and services. But that’s how these businesses make their money. At FNB, you’ll receive overall credit information as well as information on overhauling your budget and saving money — for free. This is the same advice I’d give my neighbors or my kids, and I want to share it with you, too.

People come to FNB because they know we’re looking out for their best interest. We might have to deny someone a loan because of their poor credit score, but you can guarantee we’ll also help them figure out how to right their financial ship. If you have questions about credit counseling or getting out of debt, give us a call at 888-640-8934 or visit We’re here for you.