Score Higher Credit
Your credit score can affect the quality of your everyday life by determining the payment price of what you can buy and enjoy. It therefore pays to raise your credit score as high as possible. To do that, you need to know how that score is determined — and what steps you can take to improve it.
Why would we want to help you with that?
Unlike banks, we are your own not-for-profit credit union. It’s our job to help you keep and enjoy more of your own money. When you have to borrow money, we want you to earn the best possible loan rate. The higher your score, the lower your loan rate.
Determining Your Credit Score
Today’s most commonly used scoring system is the FICO® score which is provided by the three national credit reporting agencies Equifax, Experian and TransUnion.
Your credit score is a snapshot of your finances at a particular moment in time. It’s calculated based on your credit report, which changes periodically. It also varies from one credit bureau to another because each agency may weigh credit factors differently.
A FICO credit score ranges between 300 and 850 and is calculated approximately this way:
- Payment History 35%
- This includes how many bills you paid late, how many were sent out for collection, whether you filed bankruptcy, and the dates those things occurred. The more recent the problem, the worse for your score!
- Outstanding Debt 30%
- This involves how much you owe and the how much available credit you are using. The more you owe compared to your credit limit, the lower your score will be.
- Credit History 15%
- The longer you've made credit payments, the more accurately lenders can predict how you’ll handle future payments.
- Number of Credit Inquiries 10%
- Every time you apply for a credit card or loan an inquiry shows up on your credit report. Too many indicate financial troubles and lower your score.
- Types of Credit 10%
- This variable deals with the different types of credit you have – the mix of credit cards, installment loans (mortgage and auto) and personal lines of credit.
What’s Not in your Score
By law, credit scores may not consider your race, color, religion, national origin, sex and marital status, and whether you receive public assistance or exercise any consumer right under the federal Equal Credit Opportunity Act or the Fair Credit Reporting Act.
Know Your Score
To improve your credit score, you need to know what’s in your credit report. In accordance with the Fair and Accurate Credit Transactions Act, consumers are entitled to a free copy of their credit report each year from each of three national credit reporting agencies. Getting your own credit scores or credit reports won’t affect your scores, as long as you order them from one of the sources listed here.
Mistakes and omissions on your report could affect your score. If you find an error, contact the credit reporting agency and the creditor whose information is wrong. If you believe that you have been the victim of identity theft:
- Place a “Fraud Alert” on your credit reports with each of the three credit agencies.
- Notify your lenders and close any accounts that have been tampered with or established fraudulently.
- File a police report.
- Report the theft to the Federal Trade Commission to help law enforcement officials across the country in their investigations.
Visit www.ftc.gov/idtheft for more information on identity theft.
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Source |
Contact |
Description |
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Annual Credit Report Service
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(877) 322-8228 |
This central site allows you to request a free credit report once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. |
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MyFICO®
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(800) 342-6726 |
myFICO® is the consumer division of Fair Isaac, the company that invented the FICO® credit risk score that lenders use. |
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Equifax |
Equifax score: 300 – 850 |
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Experian |
Experian score: 330 – 830 |
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TransUnion |
TransUnion score: 150 – 934 |
Pumping It Up
There are ways you can pump up your score.
1. Pay your bills on time! No matter what your excuse is for missing a payment, on time is good for you; late pays are bad. Use electronic services like online bill paying and automatic deduction to make it simple and easy. Recognize that improvements in your payment pattern may take time to show up as a higher score.
2. Order a credit report from each of the three main credit bureaus —TransUnion, Experian, and Equifax. CCCU does not use Equifax for consumer lending. Review each report and correct any errors you find. Getting rid of inaccurate information can improve your score dramatically. Once you’ve made the corrections, order and check new reports on a regular basis.
3. Recognize that the ratio of your debt-to-credit limit is critical. So don’t close those old credit card accounts you’re not using. Even if you choose to consolidate your debts and pay them off, keep them open to lower that ratio.
4. Show creditors that you’ve had credit accounts in good standing for long periods of time. They’ll factor the age of your accounts into your score. That’s another reason for not closing old accounts — and for taking on long-term debt, like an equity loan for consolidation.
5. Reduce your credit card balances to 75% of available credit or less - 25% is ideal. The bureaus like to see your credit card debt balance at less than 50% of each card’s limit.
6. Don't let anyone check your credit unless absolutely necessary. The more credit inquiries shown, the lower your score. However 2 or 3 inquiries won’t change it much.
7. If you’re turned down for a loan, ask the lender why. And fix the reasons given to help increase your score.
8. Don’t open new credit card accounts just to increase available credit to raise your score. Get credit only when you need it (unless you're trying to establish it).
9. Talk to your lenders if you are having financial difficulties. Don’t ignore them hoping they’ll go away. They may provide repayment options that can avoid negative information being reported on your credit.
Save Money & Time
Once your score is on the high end of the range (700 or above), work hard to keep it there. It will significantly lower the rate you get on real estate and consumer loans — and even insurance!
Keep in mind that other factors may also influence your rate — like the type of property you’re financing, the size of your down payment, and lender costs in making the loan.
No matter what your score, remember — you always rate better right here! At CCCU, we make it our business to find you the right loan solution, at a lower rate with fewer fees, to save you money and time.
