Understand the Way Your Credit Score is Determined


A credit score is a number lenders use to help them decide how likely it is that they will be repaid on time if they give a person a loan or a credit card. Your personal credit score is built on your credit history.

Your credit score is one of the most important parts of your financial life. It’s basically a “credit rating” that affects whether or not you can get a mortgage or finance a vehicle. Your credit score affects the interest rate you’re charged on a loan – usually, the lower your credit score, the higher your interest rate can be.

When you apply for a credit card, a loan to buy a house or car, or a line of credit to pay for a large purchase, the lender will review your credit report. A credit report is your financial report card. It provides your bill payment and loan repayment history, the amount of credit you have available, your monthly debts, and other types of information that can help a potential lender determine whether you are a good or bad credit risk. That’s why it’s important to know your personal credit score, and what you can do to improve it.

If you don’t know what’s on your credit report, you can request your free credit report by visiting annualcreditreport.com. This is the only authorized site to get your credit report from all three national credit reporting agencies (TransUnion, Experian, and Equifax) — at no cost — once per year.

If you want to improve your credit score, consider the following tips:

Subscribe to healthy repayment habits

· Pay your bills on time

· Get current with missed payments

· Understand that paying off a delinquent loan won’t remove it from your report

· Contact your creditors or a credit counselor if you’re having trouble

Here’s how to manage your debt:

· Keep balances low

· Pay off debt – don’t move it to other cards

· Don’t close unused credit cards

· Don’t open unneeded credit accounts

You can be smarter about your credit:

· Shop for a loan within a focused period of time

· Re-establish your credit history if you’ve had problems

· Check your credit report

· Don’t open new accounts one after the other if you’re new to credit

· Apply for and open only necessary accounts

· Have credit cards — but manage them responsibly

If you’re looking for more assistance, or would like to learn more about the benefits of membership, visit Fresno County Federal Credit Union at FresnoCU.com or call (559) 252-5000 for more tips and tools.