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We’re always asked about credit and credit scores and why they’re so important. We asked our Vice President of Consumer Lending, Brad Grissinger, the five most frequently asked credit questions we get. Check out his answers below!
- What is a credit score?
A credit score is a number that indicates how you handle your credit and predicts how likely you are to pay back your debt on time. The higher your score, the better you look to potential lenders, landlords, utility companies, insurance companies, and employers.
- How is my credit score determined?
There are many factors that influence your credit score including your payment history, how much you owe, the length of your credit history, the different types of credit you have, and how much new credit you have.
- How can I improve my credit score?
The best way to ensure that you have good credit is to consistently make your payments on time. If you are behind on any payments, try to get them current as soon as you can. Also, try not to max out your credit cards. Credit scores like to see that you aren’t using all of the credit you’ve been granted. Ideally, your collective credit card balances should stay below 30% of their collective limits to maximize your credit score. Once you get those areas in line, stay consistent. It can take a little time to see your credit score improve.
- Why does my credit score change?
Your credit score is just a snapshot of your credit at the time your credit report is pulled. Any updates that are reported to the credit bureaus, such as new payments, loans, or inquiries, can affect your score. This means that your score is always adjusting, even slightly. The goal is to have those slight adjustments taking place around a nice, high credit score!
- Why is my credit score important?
Credit scores can affect whether or not you get approved for a loan, an apartment, or a job. If you are approved, they also can affect they interest rate you receive. The higher your credit score, the better your interest rate could be. A good credit score can save you tens or even hundreds of thousands of dollars in interest over your lifetime. That’s well worth the time and effort to take care of it.
Do you have more questions about credit scores or credit reports? Your credit union is here to help! Contact a Financial Service Representative at 800-240-4364 ext. 4580 and we can help put you on the right path!