What's
Your Score?
Knowledge is power, which is why knowing your credit score is
a vital step to creating wealth, building and managing equity, and increasing
the likelihood you'll be approved for a loan.
Your credit score plays a significant role in your financial
health; it affects everything from getting approved for a loan, to the interest
rates you're offered. If you're wondering when the last time you checked your
credit store was, you're not alone! Roughly 30% of Americans don't check their
credit score annually, according to a national survey by BadCredit.org. But how
does it work, and why should you care? Well, credit scores may be even more
important now because Americans are utilizing credit cards to help afford
elevated living costs while they battle inflation. As a Telhio member, you can stay
on top of your credit with FREE access to our Credit Score tool via our mobile
app or online banking.
Credit Score,
powered by SavvyMoney, gives you a snapshot of your financial standing using
FICO scores, the most widely used credit scoring model. This means you're
seeing the same numbers that banks and lenders use when evaluating your
creditworthiness when you apply for a new mortgage or loan, or an increase in
credit. This tool is completely free for members, offering personalized
recommendations to help improve it.
Utilizing the services and resources offered by Credit Score
will never directly impact your credit score; rather, it results in a "soft
inquiry" that doesn't alter your score in any way.
Curious about how your score is determined? They are
calculated based on five general categories but evaluated specifically according
to your credit history. This means your credit score, similar to how you age,
will evolve with you. The categories consist of the following:
1.
Payment history: your established
patterns of on-time or delayed payments
2.
Credit usage: your spending pattern of
available credit - some lenders interpret high borrowers as a potential risk of
not repaying debt
3.
Length of credit history: how long your
accounts have been active
4.
Credit mix: your dashboard of different
accounts (i.e., installment loans, mortgage, retail credit cards, etc.)
5.
Inquiries (new credit): recently opened
credit accounts or request for limit increases
As a rule of thumb, it's best to follow these general
practices to maintain an above average credit score:
- Make at
least your minimum payment on time
- Keep
your credit card balance(s) low
- Only
apply for credit when you need it
- Review
your credit reports regularly
Remember, these methods take time to implement into your
regular routine. As you familiarize yourself with your credit score, you'll
learn how certain actions cause it to fluctuate. Considerations like account
history, types of accounts, and staying below your credit limit are good to
keep in mind as you navigate your credit patterns and regularly evaluate your
score.
As you work toward financial betterment for your future,
visit telhio.org to see why so many members
choose Telhio Credit Union for their personal and business banking needs.
