Your credit score affects every aspect of your financial life – from loan rates to cost of insurance. Yet, according to a survey by CreditCards.com, more than 50% of American adults haven’t checked their credit scores or reports in the last 6 months, and 18% admitted that they’ve NEVER checked their score or report.
Your credit score is used by lenders to determine whether to loan you money and at what rate. Basically, the better your score, the more you save. Well likewise, your credit report shows financial activity associated with your name. If you’re not checking them regularly, you won’t find out that someone has stolen your identity until it’s too late.
What’s in a number?
A credit score of 720 or more is considered prime—this means you’re in good shape. Scores under 550 mean you could be turned down for a loan. Scores in the good-not-great range (550 to 720) might get you loan approval, but your interest rates will be higher than if you had a prime credit score. Nobody likes the idea of paying more money for no reason, so it makes sense to adopt credit habits that will boost your overall score.
Taking the time to familiarize yourself with how credit scores are calculated is the first step in getting a strong score. Each credit bureau uses a slightly different calculation, but the basic breakdown goes like this:
- 35% is based on payment history. Making payments on time boosts your score.
- 30% is based on capacity. This is one of the areas where the less you use of your total available credit, the better. If you get close to maxing out all your credit cards or lines of credit, it tanks your score, even if you’re making your payments on time.
- 15% is based on length of credit. Good credit habits over a long period of time raise your score.
- 10% is based on new credit. Opening new credit cards (this includes retail credit cards) has a short-term negative effect on your score, so don’t open a whole bunch at once!
- 10% is based on mix of credit. Having a combination of different types of credit (like revolving credit and installment loans) boosts this part of your score. Credit cards are considered revolving credit, and things like car loans and mortgages are installment loans.
Get Your Credit Score at Your Fingertips
- Track your score – Stay in tune with your credit score with a refreshed number daily. Get regular updates with your new score and see why it’s changed over time. You can even monitor how your score compares to the average within your ZIP code! You also have access to free monthly credit reports through TransUnion. This is a very valuable tool for improving your score.
- See what impacts your score – Find out what influences your credit score and how you can improve it with customized tips.
- Stay in the know with notifications – You have the option to receive emails alerting you if something big ever happens. Whether your score takes a hit or shows a new account opening — we’ll notify you.
- Protect your identity – By checking your score regularly, you’ll be able to detect suspicious activity early before it has a chance to really do harm to your finances.
- Opportunities to save – You also have access to pre-qualified offers within the app that tell you based upon your credit standing, what your rate and monthly payment would be for personalized loans.
ACTION PLAN TO INCREASE YOUR CREDIT SCORE
Follow this checklist to start boosting your score today:
- Pay your bills on time—this should be the top priority.
- Keep your credit card balances low.
- Rate shop within a focused period.
- Keep unused credit cards open, even if you do not plan to use them.
- Focus on correcting negative factors.
- Check your score regularly.
Solutions for Debt: Trade Revolving Debt for Installment
If you have too much credit card debt or you just want it paid off much quicker, you may consider consolidating that debt into a fixed term signature loan or refinancing your vehicle as collateral. This could help you pay off your debt much faster with one low monthly payment. If you think you may need help, see our Listening & Lending® Solution.