Self-Help Federal Credit Union offers a specific product—the “Fresh Start” loan—designed to help families build or establish a good credit history. Since 2008, more than 2,000 borrowers have used Fresh Start loans. With funding from MetLife Foundation, we conducted a study to see how well the Fresh Start loan is meeting its mission, especially looking at whether Fresh Start helps raise credit scores.
Over a lifetime, the difference between a 650 and 750 credit score could easily mean paying $200,000 more in interest
First, why does a credit score matter? In the financial world, a person’s entire credit history is boiled down to a three-digit number. Almost all lenders rely on credit scores as part of their loan decision, using the score to determine whether a borrower qualifies for a loan and also to set the interest rate. The FICO mortgage credit score, widely used in the U.S., ranges from 300 to 850. There is no single standard for defining a “good” credit score, but people with lower scores pay higher interest rates on loans.