About Credit

Credit Scores

Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report.  It is designed to predict risk, specifically, the likelihood that YOU will become seriously delinquent on your credit obligations in the 24 months after scoring.

Why Do I Need Credit?

For a three-digit number, your credit score packs a big wallop. A low score can end up costing you thousands of dollars in added interest over the life of a car loan or mortgage. Consumers who have a very low score --or no score at all-- may not get credit on any terms.

A quick glance at this single bit of information gives creditors most of what they need to make judgments about whether you will repay a car loan, mortgage or credit card debt. Your score is a snapshot of your credit report, giving creditors instant clues about how you pay your bills, how you've handled credit over the years and even whether financial troubles have led you into the courts.

Your credit score affects more than just your ability to obtain a loan.  It can affect how much you pay for insurance, your phone, utilities and is even reviewed by many employers during the application process.

How is my Score Determined?

• 35% Payment History:  When you make a late payment, you score suffers.  The more recent, frequent and severe the lateness, the more it will affect your score.  Bankruptcies, judgments, and collection accounts have a serious negative impact.  
• 30% Amounts Owed:  Carrying high balances on revolving debt (such as credit cards) and personal loans will lower your score.  To keep your score high, pay credit cards off each month.  If you can, it's best to not use more than 40% of your available credit limit.
• 15% Length of Credit History:  The longer you have your accounts, the better it is for your score.
• 10% New Credit:  If you have recent inquiries or open new account it can lower your score.  One thing to note is that all mortgage or auto loan inquiries that occurs within a short period of time are considered just one inquiry for scoring purposes and does not negatively affect your score.
• 10% Types of Credit Used:  Having a variety of accounts, such as credit cards, retail accounts and loans will boost your score.