There’s a three-digit number connected to you that wields a significant amount of power in your life—your credit score. It’s used to determine whether you’ll qualify for loans and at what interest rate. Prospective employers may also access your credit history to get a glimpse of your financial management habits. Building up a good score takes discipline and commitment, but the rewards are tangible when you start saving money because of your smart choices.
When you need to borrow money, your credit score is considered the most influential factor in a lender’s decision to grant you credit and at what interest rate. Borrowers with low scores may be turned down for loans and credit or will pay a higher interest rate than borrowers with high scores.
Your credit score indicates your trustworthiness in paying debt and gives a glimpse into your spending habits. Every time you apply for a new credit card, mortgage, insurance policy and sometimes a job, your application is judged in part on your credit score.
Fair Isaac & Co. of Minneapolis created the widely-used credit score model, which is why you’ll hear “FICO credit score” used to describe that magical three-digit number.
FICO considers these elements when calculating your score:
You can monitor your credit history by requesting a free credit report every 12 months at www.annualcreditreport.com or by calling (877) 322-8228. Reports are available from the three credit reporting agencies: TransUnion, Experian and Equifax.
You’ve made some financial choices that are costing you a lot of money right now. Those credit card purchases that seemed like a good idea at the time are less attractive because it’s taken a long time to pay them off in full. Interest has accrued and maybe some late fees have been tacked on.
It’s time to rein in your credit card use so your money is building toward your future, not your past. PrimeWay Federal Credit Union offers Debt In Focus, a free and anonymous service that will provide you an analysis of your financial standing and personal strategies to tackle your debt and move forward.
Reaching out for help with your debt is a brave move. Even after using the Debt In Focus tools, there are some debt-reduction tips to consider:
You know a credit score is important in determining how much you’ll pay for credit. But what’s considered a good score?
In general, a score above 700 indicates good credit management, according to Experian, one of the three main credit reporting agencies. Most credit scores fall between 600 and 750. Of course, the higher your score, the better rates you can secure from lenders.
A range of credit accounts with a record of timely payments (car loan, credit cards, mortgages, etc.) generally benefits people. A high debt-to-available-credit ratio (meaning your credit is close to maxing out) on credit cards and installment loans usually works against an individual.
If you need professional help with debt management, please call PrimeWay Federal Credit Union at (713) 799-6200 to schedule an appointment with one of our certified financial counselors.