What is a Credit Score?

A credit score is a numeric value assigned to you based on your credit history. When you apply for a loan, lenders use this number to determine the likelihood of you paying that loan back. 

Therefore, the higher the number, the better your credit score, resulting in a greater chance of getting the loan. This is because a higher score shows that you have consistently made on-time payments over a long period of time and you would be a trustworthy, reliable client for the lender.  Keep in mind, having no score or a lower score doesn't always mean you have bad credit, and remember, your score isn't permanent.

What Does This Mean?

As you can imagine, building and maintaining a solid credit score is very important when you’re ready for bigger purchases like buying a house or car. Whether you’re just starting to build your credit, or you’re trying to improve your current score, there are steps you can take to reach your goals. 

What is a Good Score?

Credit scores range from 300 (poor) to 850 (excellent). Lenders tend to prefer scores that are above 720 and find scores below 630 concerning. Therefore, while striving for a score of 850 is the end goal, scores around 700 and above are considered acceptable.

Some say that checking your credit score lowers it, but that’s a myth. In fact, it has been proven that individuals who take advantage of a free yearly credit report end up making better financial decisions. Even better, if you have a checking account with Advantage Credit Union, you can get a free triple bureau credit report and score every 90 days. 

Don’t be afraid to request and review your credit report so you have a better understanding of your financial habits and current score.  At Advantage, we will even help you with this if you'd like. It's important to file a dispute on incorrect information with the credit reporting company and with the company reporting it. 

Steps Towards Improvement

With busy lives pulling us in countless directions at all hours, it’s easy to become overwhelmed and forgetful. Or maybe, you're just starting out trying to build your credit. Here are some quick and easy steps you can implement to improve your score over time. 

Pay Your Bills On Time
Whether you add reminders to your phone or write them in your calendar, reminding yourself of bill deadlines will help avoid late payments. Even better, if you can pay your balance each month, this will help to avoid finance charges and build better credit.

Don't Max Out Your Credit Limit
If you use more than one card, pay down your maxed out card first. Just like making more frequent payments, this will decrease credit utilization and help improve your score. Experts advise using no more than 30% of your available credit.

Create Credit If Just Starting Out
Try out an introductory credit card with a low limit and fixed rate - like the Credit Builder Credit Card through Advantage Credit Union. This starts your credit history and the longer you have credit and pay on time, the more information you'll have to show you're a good credit risk. 

Ensuring you have money set aside will help alleviate financial stress when it comes to paying bills on time. Opening a savings account is a great way to protect your finances when you need them most. 

We understand that life can be messy and some things aren't always clear-cut and straightforward. Advantage Credit Union can help you analyze your report and take control of your credit, savings, and financial decision-making. Open a savings account between now and the end of 2021 with Advantage CU and you will receive a FREE lifetime membership. 

A good credit score opens the door to better interest rates and low payments. Take a look at your loan options today.