Over the years you may have heard catchy jingles about your credit score, or been told through personal finance resources that you should be aware of yours. So what is it about this three-digit number that makes it so important? Your credit score is a three-digit number typically ranging from 300 to 850 though each of the three credit bureaus has a unique way of calculating credit scores that may put you slightly outside the standard range.
Checking Credit Score
The score is calculated using a variety of factors like payment history, amount of debt owed, and types of credit. It’s a measure of your financial health and can tell you the likelihood of you being approved for credit LPCCU uses credit scores when approving members for loans, like mortgages and car loans. But other companies use it too like apartment complexes, insurance companies, and cell phone companies.
Because of how widely it is used, and the way it impacts your purchasing ability, knowing it is extremely important which is why we offer free access to your credit score directly through the “Credit” tab in Net Branch online banking, powered by Savvy Money. This feature allows you to check your score regularly at no cost to you. Set up monitoring alerts for if and when your credit score changes and get special access to money-saving loan offers. Having a 700 or above is considered to be a good score.
Steps to take
Here are three steps to take if you find yours needs a boost:
Step #1: Keep your credit utilization rate under 30%. Make sure that you have 70% or more of available credit on revolving lines of credit and credit cards. For example, if your credit card available balance is $10,000 try to have at least $7,000 of available credit.
Step #2: Pay your bills on time. Your payment history is the most important factor in determining your credit score. Address any delinquencies or collection items on your credit report immediately.
Step #3: Don’t close unused cards. This seems counter-intuitive, but your credit utilization rate takes into account all available credit you have and all current balances. Meaning that card you rarely use is helping you more than you think.
Additionally, the length of your credit history is the third largest contributor to your score, so avoid closing your oldest credit line. Knowing your credit score is power. It can help you identify potential financial problems and fix them.