Making the Most of Your Credit An Advantis Credit Union Better Together Workshop

What is a Credit Score?  Your credit score is an attempt to predict specific behavior over a specific time period.  Creditors use this number to determine risk.

More About Credit Scores  Scores range from 300 to 850, with most in the 600s and 700s. Higher scores indicate a lower credit risk.  As your data changes at the credit bureau, so will any new score based on your credit report. So your credit score from a month ago will probably differ from today’s score.

Factors that Contribute to your Score Most credit scores are based on these factors:  Payment history  Amounts owed  Length of credit history  New credit  Types of credit in use

Payment History – What’s Considered  Payment information on many types of accounts.  Public record and collection items—reports of events such as bankruptcies, foreclosures, suits, wage attachments, liens and judgments.  Details on late or missed payments (delinquencies) and public record and collection items.  How many accounts show no late payments.

Payment History – Tips for raising your score  Pay your bills on time.  If you have missed payments, get current and stay current.  If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.

Amounts Owed – What’s Considered  The amounts owed.  Whether you are showing a balance on certain types of accounts.  How many accounts have balances.  How much of the credit limit is being used on credit cards and other “revolving” accounts.  How much is still owed, compared with the original loan amounts.

Amounts Owed – Tips for Raising Your Score  Keep balances low on credit cards and other “revolving credit.”  Pay off debt rather than moving it around.  Don’t close unused credit cards as a short term strategy to raise your score.  Don’t open a number of new credit cards that you don’t need, just to increase your available credit.

Length of Credit History – What’s Considered  How long your credit accounts have been established, in general.  How long specific credit accounts have been established.  How long it has been since you used certain accounts.

Length of Credit History – Tips for Raising your Score  If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly.

New Credit – What’s Considered  How many new accounts you have.  How long it has been since you opened a new account.  How many recent credit inquiries have been made.  Length of time since credit report inquiries were made by lenders.  Whether you have a good recent credit history, following past payment problems.

New Credit – Tips for Raising Your Score  Do your rate shopping for a given auto or mortgage loan within a focused period of time.  Re-establish your credit history if you have had problems.  It’s OK to request and check your own credit report and your own FICO score.

Types of Credit in Use – What’s Considered  The types of credit accounts.  How many of each type of credit account.

Types of Credit in Use – Tips for Raising Your Score  Apply for and open new credit accounts only as needed.  Have credit cards—but manage them responsibly.  Note that closing an account doesn’t make it go away.

Thank you for coming!