Understanding Your Credit Score

Credit Score Basics

Have you ever thought about the impact your credit score can have on your financial goals? When applying for a loan or credit, lenders and creditors will evaluate your score. The higher your score is, the easier and cheaper it is to borrow money, secure insurance, and quality for lower interest rates! Let's dive into what exactly a credit score is.

Credit scores run from 300-850.

• "Good" Scores: 670-739

• "Very Good" Scores: 740-799

• "Excellent" Scores: 800+

• National Average: 700

Typically, the longer someone has used credit, the higher their score is than a new user because they have had more time to build up their score.

Knowing what is included and not included is key to understanding your score. Payment history makes up the largest percent of credit scores, coming in at 35%. Amount owed comes in at 30% and account lengths accounts for 15%. And finally, at 10% each is mix of account types and new credit. Things that are not included are income, saving account balances, and checking account balances. Assets like cars or homes purchased with cash will not appear on the credit score, since no credit was involved with the purchase.

Tips for improving your credit score include handle payments by paying in full and on time to avoid missed and late payments. A missed or late payment will cause a sufficient drop in score because payment history is the largest category in calculating your score. It is also important to not max out a credit card as this will negatively impact your score. A good rule of thumb is to use less than 30% of available balance on a credit card to help maintain a good score.

To access and monitor you credit without negatively affecting your score, members can use our FREE Credit Score Tool through our partnership with SavvyMoney.