Understanding Your Credit Score Susan Lee, Manager, FRSA Credit Union
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30% Amou
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15 Percent – Length of Credit – Average length of credit Solution: Don’t close your oldest positive trade lines or open new ones.
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10 Percent – New Credit – Accumulation of debt and inquiries
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Credit Score Factors
10 Percent – Type of Credit – Revolving, Installment, Mortgage, Finance Companies
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Credit scores are what creditors use to determine your ability to repay debt. If your score is too low, you may not qualify for loans and at the very least will be paying a higher interest rate. The chart below shows the factors that are considered when calculating your credit score. These are the categories that are used to determine your creditworthiness. So, maybe you’ve hit a few bumps in the road that have caused your score to dip or even plummet. There are many steps that you can take to bring that number up. Here are the items considered when determining your score:
Solution: Fill in the hole. If you have paid all your credit cards off, it may not affect your score favorably.
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Goals: Aim for an 800 and to stay above a 730. Once you’ve 35 Percent – Payment reached that A+ tier, History – How you have paying off a credit card paid debt in the past. 15 or a car loan won’t make a L % Public Records: Bankrupts, big difference. The payof eng Foreclosures, Repos, Tax % C t ment history (35% of your 0 1 h re Liens, Garnishments and score) goes a long way to di Collection Items New t establishing your credit worthiSolution: Time – Unfortunately this ness. Visit annualcreditreport.com Credit is the one area that is tough to improve. and pull a free copy of your credit report Collection items should be paid if possible. and make sure that there is nothing unexpected Lenders understand that people go through bad times, on there. If you have collection items, work towards but showing your willingness to repay goes a long way. paying them off. FRM 30 Percent – Amount Owed – Balances in relation to limits on all trade lines – Revolving Debt, HELOC, Susan Lee is the Manager of the FRSA Credit Union. Installment Loans, Unsecured LOC She has 24 years of credit union experience. Contact Solution: Increase available capacity or consider debt consolidation loans. Ideally your credit cards balances should be one third of the credit limit.
her at 800-767-3772 ext. 372 or slee@frsacu.org to discuss the best solution to increase your credit score.
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