Understanding and Improving Your Credit Score

Your credit score is one of the most important facets of your financial life. It determines everything from the rates you get on auto loans to whether you can qualify for a home mortgage loan. Despite its importance, many people don’t understand their credit scores and feel powerless when trying to improve them. Here is what you need to know about your credit score and what you can do to make it the best it can be.

Credit Scores 101

Your credit score is a three-digit number that helps lenders and other creditors, like landlords, get a picture of your financial history. Although the scoring can vary depending on which credit bureau is calculating it, scores typically range from 300 to 850. The higher your credit score, the better your financial history looks to lenders.

A long list of factors goes into determining your credit score. These include:

  • If you pay your bills on time
  • How much debt you have
  • If you have any financial judgments against you
  • The length of your credit history

Older late payments and judgments have less impact on your credit score than new ones. Generally, information is removed from your credit report after seven to 10 years, but some states have laws with different guidelines.

Improving Your Credit Score

The first step to improving your credit score is knowing what your score is and checking your credit rep

ort to see if there is any misinformation there that could be holding your score down, like accounts that aren’t yours or that are in good standing but that have been reported as overdue. You can petition the credit bureaus to remove this information, and your score may increase.

Paying your bills on time is an essential part of keeping your credit score up, so make sure you stay current or get caught up if you’re behind. Try not to use any more than 30% of the total credit available to you at any one time, as the ratio of your available credit to your debt also greatly impacts your score. Paying down debt will increase your score.

At GCS Credit Union, our staff is available to help our members navigate complex financial issues and make the right decisions for them. Get help with everything from opening a checking account in O’Fallon to using online banking by calling (618) 797-7993.

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