Understanding Your Credit Score
Your credit score is a number derived from your overall credit report and is based primarily on how well you pay your bills and how much you owe. The higher your score, the more likely you are to get a loan... as well as a better interest rate on that loan.
The score used by most lenders is the FICO score, which is a number that ranges between 300 and 850. VantageScore is another credit score, with numbers ranging from 501-990.
Here are the primary pieces used to determine your credit score:
- Paying bills on time. Lenders want customers who pay when expected. On-time payments will show up on your credit report and can raise your credit score. Late payments - and how far overdue those payments are - will lower your score, as will bankruptcies or accounts that have been turned over to collection agencies.
- Your goal should be to keep loan balances low; not approach or exceed your credit card limits; and not owe money to a large number of creditors.
- To have a credit score, you need to have a credit history such as a credit card, car loan, student loan or home loan. In general, a longer credit history will help increase your score. If you’re just getting started and need to take out a loan, talk to your banker or a financial adviser about the best ways to approach establishing credit.
- Types of credit. There is no magic mix, but factors that can weigh in your favor include the types and number of accounts you have, such as a mix of credit cards and installment loans. Be aware, however, that too many accounts can actually lower a number.
- Applying for numerous accounts in a short period of time can lower your score.
- Your credit score is not affected by your race, gender, religion, marital status, or national origin.
Why does a good score matter?
- Your goal should be a high score. Generally speaking, a FICO score of 700 or above is what you should shoot for, with higher scores often translating to lower interest rates. A high credit score and good credit report can make getting credit easier.
- A lower number doesn’t always mean you can’t get credit, but it can make getting a loan harder and can mean higher interest rates because you’re seen as more of a credit risk.
- If you have a low score, you can help bring it up over time by beginning to pay your bills on time and paying down your loan balances.
Can I get my credit score for free?
Yes! Peake members who use are enrolled in Peake Online or PeakeMobile may opt in to receive their credit score and their VantageScore at no cost. Once opted in, members will also have access to free information on how to increase your score and optimize your financial health.
You can also get your free annual credit reports from the three major credit reporting bureaus at www.annualcreditreport.com. A good strategy is to get spread them out over the year so you get one every four months - that way you'll get a heads up if something is off.
Visit www.peakefederal.com to enroll or log on to Peake Online or download the PeakeMobile app from your app store to get started.
Have questions? We're here to help! Contact us at 410-828-4730, 800-234-4730, or memberservices@peakefederal.com with any questions you may have.