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About Credit Scores

What Makes up My Credit Score?

  1. Payment History - 35% of your credit score is simply paying your bills on time! Your credit report shows the last 24 months' worth of payments - so one late payment will follow you for 2 years!
  2. Capacity - or how much unused credit you have out there. If the only loan you have is a credit card with a $500 limit and you have $450 in charges - you have $50 in capacity. Keeping credit card balances low will help with keeping the capacity part of your credit score high.
  3. Length of Credit - Which is why it's important to establish credit as soon as you can and responsibly. The longer your credit history, the better your score!
  4. Accumulation of debt in the last 12-18 months. Every time someone runs your credit report, it will show up on your next report. If you open many new accounts in a short time period or have too many inquiries - it will lower your score.
  5. Credit Mix - Having a good mix of revolving and installment loans will keep your credit score up. An example of a revolving score is a credit card and an example of an installment loan would be a typical auto loan.

What actions can hurt my Score?

  1. Missing Payments or Paying Late!! Regardless of how much your monthly payment is - it can take 24 months to restore your credit score with just one late payment! Your landlord can report your late payments as well, so be sure to get that check in on time, too!
  2. Maxed Out Credit Cards! Try to keep your balance low or at $0. This isn't always possible so be sure that your credit card limit is set at an amount that you're comfortable with.
  3. Shopping for credit cards Excessively.
  4. Opening up numerous loans in a short time.
  5. Having more revolving debts (credit cards) in relation to installment debts (auto loans, etc.)
  6. Closing Credit Cards - this could lower your capacity as well as your length of history.
  7. Borrowing from finance companies

What can I do to improve my Score?

  1. Pay bills on time! Older late payments will fall-off after time.
  2. Pay down your credit cards.
  3. Move revoloving debt into installment debt.
  4. Slow down on opening new accounts.
  5. Aquire a solid history with years of experience.

Would you like additional information or would you like to see your Credit Report? Stop in to see one of our loan officers and we would be happy to help! We recommend pulling your credit report once a year to be sure that you haven't been a victim of Identity Theft. Your Credit Score is a very important number for you to know; it effects the amount you pay to borrow money, potential employers can look at it and even insurance companies can consider your score when deciding your premiums. Scared of what you might find? Don't be - we'll give you the tools and tips to start raising your score up today!

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