If you’re thinking about applying for a credit card, getting a loan, or buying a house, you’re going to want to know your credit score. A credit score is a rating that lenders use to determine your credit risk and the potential of paying off your loan. Low scores can hurt your chances to receive a loan or lead to lenders charging you higher interest rates or requiring a larger down-payment.
But your credit score isn’t just a number, it’s a key factor in your overall financial health. It can affect everything. The better your score, the more options and savings you can unlock.
In this blog, we’ll break down exactly what credit is, how scores work, and the practical steps you can take to build, maintain, and improve your credit, no matter where you’re starting from.
What Do the Numbers Mean?
The most used scores range from 300 to 850 and are based on your credit report, which details whether you pay bills on time, how you have used credit in the past, and how much debt you have.
The breakdown follows a ‘poor’ to ‘great’ progression, with…
– 300 to 579 being considered ‘Very Poor’
– 580 to 669 being labeled ‘Fair’
– 670 to 739 putting you in the ‘Good’ range
– 740 to 799 rating you as ‘Very Good’
– And 800 to 850 being considered ‘Exceptional’
So, how do you find your credit score? Since your credit score is based on your credit report, you should check your report regularly, looking for any discrepancies in payments and your credit accounts. You can check your credit report with our free Credit Score Dashboard available in your online banking account.
Ways to Improve Your Credit Score
1. Review your credit report and look closely at any errors that show late payments or incorrect credit limits on cards and immediately report any errors.
2. Always pay your bills on time. Late or missed payments will quickly drag down your credit score.
3. Pay down your credit card balances. The less you owe, the more it will help your credit score. A good guideline is to keep your balance below 30% of your credit limit on each card.
4. Focus on your loan applications. When you’re looking for a new auto loan or mortgage, try to submit all your applications within a two-week period. For these types of loans, multiple inquiries within a two-week period are treated as a single inquiry and won’t hurt your credit score like multiple credit card inquiries will.
Mastering your credit doesn’t happen overnight, but every smart step you take today builds a strong financial future tomorrow. Stay on top of your bills and review your credit report at least once a year. Improving your credit score is a smart step toward building a strong and secure financial future.
This article was originally shared via our education partner, MoneyIQ.
