Understanding Your Credit Score-What Makes Up Credit?

How Critical Is Your Credit Score?

Your credit score may make a difference in obtaining a loan, in getting a great rate on your loan, and paying a higher insurance premium. It could impact your future employment or your ability to rent a home or an apartment. Base FICO scores have a 300 to 850 score range.

Every consumer should request a credit report annually from each credit bureau and check it for errors. When problems are not resolved it can cost you money.

1. What makes up a credit score?

Payment history. Do you pay on time or are you running 30, 60, 90 days behind? It pays to pay on time. Other factors are capacity (available credit), length of credit, accumulation of debt in the last 12-18 months (number of inquiries and opening dates), and mix of credit (installment/revolving and number of finance company loans). The more finance company loans there are the lower the score. That is why it pays to finance at the Credit Union.

2. What hurts the score?

Missing payments, late payments, "maxed out" credit lines, excessive shopping for credit, opening numerous accounts in a short period of time, having more revolving loans in relation to installment loans, and borrowing from finance companies.

3. What doesn't affect the score?

Debt ratio, income, length of residence, or length of employment.

4. How do you improve your score?

Pay down on credit cards, make payments on time, slow down on opening new accounts, acquire a solid credit history with years of experience, and move revolving debt to installment debt.

Learn more about credit scoring through these resources:

MyFico.com – shows you in great detail what makes up your credit score. You’ll also find instructions to positively impact your score in the future. And, you’ll be able to see information and practices that can protect you when obtaining credit.
MyCreditEducation – tools you need to manage your credit, protect your identity, and to prepare for major purchases.
Credit.org – will show you where your credit score falls within the general population and what kinds of loan rates you’ll receive with your current score. There are also sections for you to learn about debit management and credit counseling.
AnnualCreditReport.com – You are entitled to receive your credit report for free, once each year, from the three major credit-reporting agencies—Equifax, Experian and TransUnion. It’s a good idea to do this so that you can look for inaccuracies or errors that may be affecting your score. You can also call 1-877-322-8228 for help over the phone.
Consumer Affairs – lists the top 10 rated credit score sites. It also provides information on what features matter most, what are the different types of credit reports and more.

For additional information on your Credit Report, your Credit Score and how they can affect your overall financial health, give us a call at 321-455-9400 (inside Brevard) or 800-662-5257 (outside Brevard) or come visit us at any one of our convenient branch offices.