We recently posted a blog breaking down the basics of what a Credit Score is for better understanding.
As promised, below is a list we've compiled of ways you can boost your
Credit Score and make it soar!
-Pay Your Bills on Time:
Late (aka: ‘delinquent’) payments have a huge negative impact on your overall
score. The more you’re on time with
bills, the better your score will get.
-Don’t
Open More Cards than Necessary:
Multiple new accounts can start to lower your account ‘age’ and in turn, drop
your score as well.
-Be a Responsible
Manager:
Having Credit Cards is good, as long as you are good about keeping track of them (limits, payments, etc.). Having no
cards at all can be a higher risk, so be on top of the ones you do have.
-Maintain a Low
Balance:
A higher ‘outstanding debt’ can really affect your overall score – it can be
lowered over 50 points just by maxing out a card!
-Keep an Eye on your
Credit Report:
From time to time, outdated or inaccurate details can show up on your Credit
Report – this too can really damage your Credit Score. Check your Report often, and if/when you see
an error file a claim to get it fixed.
-Be Active:
Just having a credit card isn't going to increase your Credit Score – you have
to use the card to really establish a strong credit. Even if it’s a card you only use on
groceries, get it – and use it wisely!
Last, but certainly not least --
-Be Persistent:
Improving your Credit Score can take years of diligent spending and dedication to watching your finances – it may not be easy, but we can promise that it will
be worth it. Commit yourself to
practicing Financial Fitness today!
Good Credit can be essential to
living without financial stress. If
you’d like to talk with one of us, or get help pulling your free Credit Report, call or stop in –
we’re here for you! Our Member’s
financial being is always our priority. We are People Helping People.
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We often
hear about the importance of a strong, well-kept Credit Score; but do you
really understand what a Credit Score is?
Although the details are far from simple, we did our best to break it
down and cover some main points to help you become more informed, so next time
you’re asked about a Credit Score, you don’t have to just smile and nod…
What Exactly is It?
A Credit
Score is a 3 digit number generated by mathematical algorithms taken from
various pieces of information within your Credit Report. Basically, this calculated number aims to
predict your risk as an individual and analyze the chances of you becoming a
“delinquent” on different credit obligations.
Who Uses It?
Your
Credit Score is often used by financial institutions and credit card companies
to evaluate your eligibility for lending money.
Your score can help determine if you qualify for a loan, what your
limits are, and the interest rate.
However, Credit Scores are not only for financial institutions. A variety of organizations (cell phone companies,
insurance companies, landlords, etc.) can use your Credit Score information for
the same techniques. Your Credit Score
can be the difference between a low or high interest rate, qualification for an
apartment rental, and much more.
Are they All the Same?
While
there are all kinds of existing Credit Score models, the most common is the
FICO. According to myFICO.com, “90
percent of all financial institutions in the U.S. use FICO scores” when making
decisions. Your FICO score can be
anywhere in the 300 – 850 range; a higher FICO score number indicates lower
risk. There are three different Credit
Bureaus that gather your score: Experian, Equifax, and TransUnion – this means
each consumer has three FICO scores.
Your FICO score is made up from your Credit Report’s data that is sorted
into 5 main categories (see below). Within this
model, some factors are weighed more heavily – like debt and payment history.
What Makes up the Score?
On the right, you’ll see a model of what goes into your
Credit Score. Your
Payment History (35%) includes account payment information, including
delinquencies and public records. Your
Amounts Owed (30%) is how much you owe on each of your accounts. The Length of Credit History (15%) is the
amount of time between activity on accounts and how long they've been
open. Types of Credit Used (10%) is the
variety of accounts you have (installment and revolving). Lastly, New Credit (10%) includes credit
inquiries you've made, recently opened accounts, and your pursuing of new
credit. It is important to note that
personal and demographic information (age, marital status, race, income,
address, employment, etc.) do not affect your score.
-Be a Responsible
Manager:
