Financial education news and updates from the Washington State Department of Financial Institutions.
What Does Borrowing Really Cost?
When a refrigerator stops working, waiting for the next paycheck may not be an option. We might compare a credit card with an installment loan and find that both offer a way to pay for the replacement over time. One emphasizes a low monthly payment. The other highlights its interest rate and total…
How Credit Cards Really Work
Most of us don't spend too much time thinking about how a credit card works, as long as we’re able to get the balance paid off every month. We make the purchase, the statement arrives, and we pay the bill. The first time a purchase has to stretch into another month, however, things can get less…
When Does Borrowing Make Sense?
Imagine a household facing a $2,500 car repair. The car is needed for work, school and getting through the week. There is enough in savings to cover the repair, but doing so would leave very little behind. A credit card could cover the bill and preserve the savings, but it would also create a…
Good Credit Gives Us Options
One of the reasons we work to build good credit is that it can give us access to better borrowing terms. A lower interest rate means paying less to borrow the same amount of money. If our credit helps us qualify for a better rate, it is worth finding out what different lenders are willing to offer…
Why Did My Credit Score Change?
How could paying off a loan hurt my credit? The short answer is that our credit scores change when the information used to calculate them changes. Sometimes that happens because we did something different. Sometimes it happens because an account was paid off or a balance changed. And sometimes…
How Credit Scores Really Work
A credit score can only be calculated when there is enough information in a credit report to generate one. Once that information is available, a scoring model looks at the credit history and turns it into a number. Think of it somewhat like a weighted grade point average. A GPA combines many…
No Credit History? You're Not Alone
No credit isn't the same thing as bad credit. But when there is little or no credit history to review, it can still limit our choices. A person with little credit history may have trouble qualifying for a loan or credit card. They may have fewer options or need a larger security deposit or a co-…
When Your Credit Report Looks Wrong
It's easy to jump to the worst conclusion. It's also easy to put the report aside and tell ourselves we'll look into it later. Neither is a particularly good response. An unfamiliar item doesn't automatically mean identity theft. Financial companies sometimes use names that are different from the…
What’s Actually on Your Credit Report?
A useful way to think about a credit report is as a kind of report card. It records information about how we've handled credit, but it doesn't tell the whole story about us. A school report card might show how someone performed in a few classes, but it doesn't tell us whether that person is a good…
Why Credit Histories Matter
When a lender doesn't know us personally, they need another way to decide how much risk they're taking on by lending money to us. That raises the next question: How do they decide whether to trust us? For many financial decisions, one of the tools they use is our credit history.When a financial…