Everything you need to know about your Credit Score

Your credit score has a major impact on your life. It can affect several areas of your life, from job applications to whether or not you are approved for loans and how much interest you will pay on loans if you are approved. Having a good credit score can help you achieve your goals and give you some peace of mind.

What is a credit score?

Your credit score is a mathematical assessment of your likelihood to repay a debt. Your score is based on the information in your credit report. Your score is the result of each area on your report:

Types of credit you have (credit cards, car loans, mortgages, personal loans, secured loans)

• Your payment history
• Your initial balance versus your current balance
• When you opened the loan or credit card
• Any credit related legal actions, such as judgments, foreclosures, bankruptcy’s or repossessions
• All hard pull inquiries

The most commonly used scoring method is the FICO score, the FICO score ranges from 300 to 850.

Individuals with a higher FICO score will generally have an easier time obtaining credit with lower interest rates. A score of at least 700 is considered to be good while a score above 800 is considered to be excellent credit. If your score falls below a 600 you will have a harder time obtaining credit, especially for a mortgage loan.

Below is a break down of the factors used to determine your score:

• Length of credit history 15%
• Payment history 35%
• Balances owed 30%
• New Credit 10%
• Types of credit used 10%

Ways to improve your credit:

1. Always make your payments on time each month. This is the largest percentage of your credit score.
2. Do not close your old accounts. A long history shows the creditors you have stability.
3. Pay down existing debts. Look for ways to make more than minimum payments, your debt to income ratio can lower your score.
4. Check your report annually for errors. If you find any errors dispute them with the credit bureau.
5. Avoid applying for credit excessively. Every time your credit is pulled it effects your score, also a creditor will see that you are actively looking for more credit.
6. Be PATIENT. It takes 7 years for any derogatory information to fall off of your report, but the last 2 years of your history are the most important.

Important contact information

Equifax
www.equifax.com
(800) 685-1111

Experian
www.experian.com
(888) 397-3742

TransUnion
www.transunion.com
(800) 888-4213

Fair Isaac Corporation
www.myfico.com
(800) 319-4433

Annual Credit Report Request Service
www.annualcreditreport.com
(877) 322-8228