The Cutting Edge Corner

Your credit report is like a financial report card, it tells lenders how you’ve handled credit in the past and can impact your ability to borrow, rent, or even get a job. But reading it can be intimidating if you’re not sure what to look for. Here’s a quick guide to help you make sense of it.

1. Personal Information
At the top of your report, you’ll find basic details like your name, address, Social Security number, and employment history. Make sure everything is accurate. Mistakes here can lead to confusion with someone else’s account.

2. Credit Accounts
This section lists all your credit accounts, including credit cards, auto loans, mortgages, and personal loans. For each account, you’ll see the lender’s
name, the account number (partially masked), type of credit, date opened, current balance, credit limit or loan amount, and payment history. Look
closely for any missed or late payments, and make sure the balances are correct.

3. Credit Inquiries
When someone checks your credit, it shows up as an inquiry. There are two types: soft inquiries (like when you check your own credit) and hard inquiries (when a lender checks it for a loan or credit application). Too many hard inquiries in a short time can lower your score slightly.

4. Public Records & Collections
If you have any bankruptcies, judgments, or accounts sent to collections, they’ll be listed here. These items can seriously impact your credit, so it’s
important to make sure they’re reported accurately; or better yet, not there at all.

5. Dispute Errors
If you see something wrong—like an account that’s not yours or a late payment that you actually made on time, you have the right to dispute it
with the credit bureau. Errors are common, and fixing them can boost your score.

Tip: You’re entitled to a free credit report from each of the three major bureaus (Equifax, Experian, and TransUnion) every year at AnnualCreditReport.com. Review all three to catch any inconsistencies. If you would like some one-on-one assistance with reviewing your credit report, just reach out to Cutting Edge Credit Union. We are always more than happy to assist you with this and other financial topics.

When money’s tight, it can be tempting to take out a quick loan to cover expenses. But not all lenders play fair. Some prey on people in stressful financial situations, offering “easy cash” with hidden costs that can spiral out of control. These are called predatory lenders, and their practices can leave borrowers stuck in a cycle of debt that’s hard to escape.
Here’s what you should know before signing any loan papers.

1. What Makes a Lender “Predatory”?
Predatory lenders target people who may be struggling financially or have less-than-perfect credit. They often advertise quick approval and no credit checks, but the catch is in the fine print. These loans come with extremely high interest rates, fees, and repayment terms designed to keep borrowers paying far more than they borrowed in the first place.

2. How Bad Can It Get?
Some short-term or title loans can carry annual percentage rates (APRs) as high as 400% to 500%. That means a small $500 loan could cost you thousands of dollars in interest and fees if you can’t pay it back right away.
For example, one installment loan of $500 can charge more than $1,700 in finance charges, requiring 12 monthly payments of nearly $190 — all to borrow just a few hundred dollars. A $1,500 loan might cost over $4,200 in fees, with payments around $475 each month. Even at the “lower” end, a $2,500 loan could still cost over $4,400 in interest, bringing total repayment close to $7,000.
What starts as a “temporary solution” can quickly turn into long-term debt.

3. Red Flags to Watch For

• The lender doesn’t clearly explain the loan terms or tries to rush you into signing.
• They promise “guaranteed approval” regardless of your credit.
• The loan requires your car title or other valuable property as collateral.
• Fees and interest seem confusing, excessive, or hidden.

If a loan offer sounds too good to be true, it probably is. Always read the fine print carefully and ask questions until you understand exactly what you’ll owe.

4. Safer Alternatives
Instead of turning to high-cost payday or title lenders, consider these options:

• Credit union personal loans: Credit unions often offer small-dollar loans with fair rates and flexible repayment options.
• Payment plans: Many utility companies and service providers can set up payment arrangements if you’re behind.
• Emergency assistance programs: Local nonprofits or community agencies sometimes offer help with rent, food, or bills.

5. We’re Here to Help
At Cutting Edge Credit Union, we put people over profit. That means we are here to help you build financial stability, not trap you in debt. If you’re facing an unexpected expense or considering a short-term loan, talk to us first. We’ll walk you through your options and help you find a solution that fits your budget, without the risk of 500% interest.
Financial stress can happen to anyone, but you don’t have to face it alone. Reach out to us anytime for advice, resources, or a free financial consultation.

When you borrow money or save it, interest plays a big role in how much you ultimately pay or earn. But interest can be confusing, especially when it’s shown as a small percentage that doesn’t seem like much at first glance. In reality, even a few percentage points can make a big difference over time.

Understanding how interest works can help you make better financial decisions and avoid costly surprises. Here’s what you should know:
1. What Is Interest, Really?
Interest is the cost of borrowing money, or the reward for saving it. When you take out a loan, interest is what you pay the lender for using their money. When you put money into a savings account, interest is what the financial institution pays you for keeping your money there.
It’s usually shown as a percentage, but that percentage represents real dollars added to what you owe or earn over time.

2. APR vs. APY: What’s the Difference?
You’ll often see two different terms when interest is discussed:

• APR (Annual Percentage Rate): This shows the yearly cost of borrowing money or the return on certain deposit accounts, including interest and some fees. APR is used for loans, credit cards, and some deposit products like CDs.
• APY (Annual Percentage Yield): This shows how much you earn on savings in a year, including the effect of compounding interest.

APR tells you how much a loan or deposit product truly costs or earns. APY tells you how much your savings can grow.

3. Why Small Percentages Matter
A difference of just a few percentage points can add up to hundreds or even thousands of dollars.
For example, a $10,000 loan at a lower interest rate could save you thousands compared to the same loan at a higher rate, even if the monthly payment only looks slightly different. Over time, higher interest means more of your payment goes toward interest instead of the balance you actually owe.
That’s why comparing rates matters, especially for long-term loans like auto loans or credit cards.

4. Simple Interest vs. Compound Interest
Not all interest works the same way.

• Simple interest is calculated only on the original amount borrowed or saved.
• Compound interest is calculated on the original amount plus any interest already added.

Compound interest can work for you when you’re saving, helping your money grow faster. But it can work against you with debt, causing balances to grow quickly if payments are missed or only the minimum is paid.

5. How Interest Impacts Your Financial Health
High-interest debt can make it harder to get ahead, even when you’re making regular payments. On the other hand, earning interest on savings can help build a safety net for emergencies and future goals.
Understanding interest helps you:

• Choose loans with fair, affordable terms
• Pay less over time by paying more than the minimum when possible
• Grow your savings more effectively

6. We’re Here to Help
At Cutting Edge Credit Union, we believe financial knowledge is just as important as financial products. We’re here to help you understand your options, compare rates, and choose what makes the most sense for your situation.
If you have questions about loan interest, savings rates, or how to make interest work for you instead of against you, stop by or give us a call. We’re always happy to explain things in plain language and help you feel confident about your financial choices.