Making the Most of Your Credit
An Advantis Credit Union
Better Together Workshop
What is a Credit Score?
> Your credit score is an attempt to predict specific
behavior over a specific time period.
> Creditors use this number to determine risk.
More About Credit Scores
> Scores range from 300 to 850, with most in the
600s and 700s. Higher scores indicate a lower
credit risk.
> As your data changes at the credit bureau, so
will any new score based on your credit report.
So your credit score from a month ago will
probably differ from today’s score.
Factors that Contribute to your Score
Most credit scores are based on these factors:
>
>
>
>
>
Payment history
Amounts owed
Length of credit history
New credit
Types of credit in use
Payment History –
What’s Considered
> Payment information on many types of accounts.
> Public record and collection items—reports of
events such as bankruptcies, foreclosures, suits,
wage attachments, liens and judgments.
> Details on late or missed payments
(delinquencies) and public record and collection
items.
> How many accounts show no late payments.
Payment History –
Tips for raising your score
>Pay your bills on time.
>If you have missed payments, get current and
stay current.
>If you are having trouble making ends meet,
contact your creditors or see a legitimate credit
counselor.
Amounts Owed –
What’s Considered
> The amounts owed.
> Whether you are showing a balance on certain
types of accounts.
> How many accounts have balances.
> How much of the credit limit is being used on
credit cards and other “revolving” accounts.
> How much is still owed, compared with the
original loan amounts.
Amounts Owed –
Tips for Raising Your Score
> Keep balances low on credit cards and other
“revolving credit.”
> Pay off debt rather than moving it around.
> Don’t close unused credit cards as a short term
strategy to raise your score.
> Don’t open a number of new credit cards that
you don’t need, just to increase your available
credit.
Length of Credit History –
What’s Considered
> How long your credit accounts have been
established, in general.
> How long specific credit accounts have been
established.
> How long it has been since you used certain
accounts.
Length of Credit History –
Tips for Raising your Score
> If you have been managing credit for a short
time, don’t open a lot of new accounts too
rapidly.
New Credit –
What’s Considered
> How many new accounts you have.
> How long it has been since you opened a new
account.
> How many recent credit inquiries have been
made.
> Length of time since credit report inquiries were
made by lenders.
> Whether you have a good recent credit history,
following past payment problems.
New Credit –
Tips for Raising Your Score
> Do your rate shopping for a given auto or
mortgage loan within a focused period of time.
> Re-establish your credit history if you have had
problems.
> It’s OK to request and check your own credit
report and your own FICO score.
Types of Credit in Use –
What’s Considered
> The types of credit accounts.
> How many of each type of credit account.
Types of Credit in Use –
Tips for Raising Your Score
> Apply for and open new credit accounts only as
needed.
> Have credit cards—but manage them
responsibly.
> Note that closing an account doesn’t make it go
away.
Thank you for coming!