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Establishing or Improving Credit

Credit scores are more than a number – they're a vital part of your financial fitness. Credit influences your daily life – renting an apartment, obtaining a great rate on car insurance, or your ability to get a loan are all influenced by your credit score. Good credit needs to be nurtured and maintained over time, so it's there for you when you need it.


The better your score, the more likely you are to reach your financial goals. Here are some credit facts and tips that may help your score stay strong:

What's in a number?

FICO credit scores are used to evaluate your borrowing potential – a snapshot of your credit worthiness at a given point in time. Scores range from 300-850. A score in the mid-700s or higher is considered a strong score.

There are 5 factors that determine your score:

  • 35% is based on payment history
  • 30% is based on the amount you owe
  • 15% is based on the length of your credit history
  • 10% is based on new credit and the number of times you ask for credit
  • 10% is based on your credit mix (the different types of loans you hold, including installment loans, such as a mortgage, and revolving loans, like credit cards)

Use Credit Wisely
Responsible credit use can help build solid credit history, but reckless use can drag down your score. A good rule of thumb for using your credit is to only borrow for events that improve your life, like a car, home, or education.

If credit card use has hurt your score, refrain from using your cards but keep them open – people with no credit cards may be viewed as higher risk than those who have managed credit cards responsibly.

Check Credit Reports Annually
Obtain a copy of your credit report at least once a year and ensure the credit history being tracked for you is accurate. If there is an error on your credit report, contact the reporting credit agency and work with them to correct the mistake.

You are entitled to one free credit report every 12 months from the three major credit bureaus.

Pay Bills on Time To Boost Your Score
Paying bills on time comprises 35% of your score, so staying current on your bills is key to strong credit. If you tend to forget when payments are due, setting up automatic bill pay is a great way to always pay on time. Late payments may not only damage your credit score, but may raise your interest rates as well.

If Faced With Debt, These Options May Help You Manage It Better:

  • Call creditors and arrange for an extended payment schedule.
  • Don't ignore debt as if it will go away on its own – instead of avoiding phone calls and letters from your creditors, contact them to discuss setting up an easier payment plan. This will reflect more positively on your credit than ignoring the situation.

Want to Learn More?
Some additional resources for more information on credit:

Annual Credit Report
Consumer Finance

Credit Reporting Agencies
Equifax
Experian
Transunion

*With information from Yahoo! Finance, Annual Credit Report


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