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Credit Scores

WHAT IS A CREDIT SCORE?

A credit score, ranging from 300 to 850, reflects your money management skills. Higher scores indicate better credit health. A good score is typically 700 or higher, and scores above 760 often secure the best rates. Credit agencies update scores monthly, though timing varies.

 

HOW IS A CREDIT SCORE CALCULATED?

Credit scores are calculated using several factors:

  • Payment History (35%):
    Timely payments boost your score.
  • Credit Utilization (30%):
    Using less of your available credit is better.
  • Length of Credit History (15%):
    A longer credit history is advantageous.
  • Credit Mix (10%):
    A diverse credit portfolio is beneficial.
  • New Credit (10%):
    Frequent credit applications can lower your score.

 

WHY YOUR CREDIT SCORE MATTERS

  • Credit Approval: Higher scores improve your chances of approval and lower interest rates.
  • Interest Rates: Better scores mean lower rates on loans and credit cards.
  • Renting: Landlords may check your score to decide on your rental application.
  • Utilities: A good score might reduce deposits for services.
  • Job Opportunities: Some employers review credit scores for positions handling finances.

 

TIPS TO IMPROVE YOUR CREDIT SCORE

  1. Pay bills on time.
  2. Pay down credit card balances.
  3. Diversify your credit types.
  4. Keep old accounts open.
  5. Regularly check your credit reports.
  6. Address any credit report issues.
  7. Request credit limit increases.
  8. Limit new credit inquiries and accounts.
  9. Check your credit report annually and dispute errors.
  10. Monitor for identity theft.

 

BUILDING CREDIT WITHOUT DEBIT

  • Credit-builder loans: Funds are deposited into a savings account you access after payments.
  • Secured credit cards: Backed by a cash deposit, offering a line of credit.

Once your credit score is above 700, explore ways to save money by refinancing loans or reviewing insurance rates, as excellent credit can lead to better deals.