Credit Score Information

How Your Credit Score Affects Your Loan

If you’ve applied for a loan lately, chances are good that a key factor used in determining your creditworthiness was a number you may know little or nothing about - your credit score.

What is a Credit Score?
Your credit score is a number calculated using various bits of information about you and your credit habits. Your creditworthiness “score” is rendered as a number between 0 and 1,000. The higher the number, the more likely you will receive the kind of loan you’re looking for. On the other hand, lower scores indicate a higher risk to the creditor - which can affect your chances of obtaining a loan.

How a High Credit Score Can Help You
The higher the score you receive, the better off you’ll be when it comes to applying for credit. Your good showing means that creditors can be confident you’ll pay off your obligations promptly and according to the terms you’ve agreed upon. That means you’ll be eligible for more attractive finance rates, better terms, and other great features that individuals with lower credit scores won’t have access to.

How a Lower Credit Score Can Hurt You
A lower credit score means you have had some credit problems - several late payments on credit cards or loans, overuse of credit, or perhaps even a bankruptcy. All these factors work to lower your credit score and, in the end, will usually translate into higher interest rates, shorter grace periods, and generally less attractive terms than those offered to high scorers.

How Can You Improve Your Credit Score?
Although your credit score is rarely the only factor used to determine your creditworthiness, it is an important tool creditors will likely use. Find out how to improve your credit score.

How to Improve Your Credit Score

Whether you’re considering applying for a new credit line and want to improve your approval chances or just make sure your credit score gives you the best interest rate, you can take the following steps to improve your credit score.

Higher Points Equals a Better Score
There are several factors that go into calculating a credit score. These are the most common:

• Your Payment History –– If you’ve never missed a payment and have no negative public records (like collection accounts or judgments against you) your credit score will be much higher than those people who’ve had a less than perfect payment history. Of course, life can be unpredictable and creditors understand this——to a certain extent. If you’ve made a few late payments on one or two accounts over the years, your score may be lowered, but not enough to ruin your chances for the best financing options.
• Your Credit Usage –– Are you a chronic credit user? Are your credit cards maxed out? Do you make only the minimum payment every month? If so, then your credit score may be lower. However, if you have plenty ofcredit available but use it sparingly and responsibly, you’ll be rewardedwith a higher credit score.
• Length of Your Credit History –– Have you been using credit responsibly for many years? If so, you have a proven track record and therefore will receive a higher score. On the other hand, people with less than seven years of credit history often receive a lower score.
• Credit Applications –– Are you tempted to apply for every credit card offer that comes your way? Don’t do it! Your credit report will reflect these applications and any lender that sees them may interpret the activity as an attempt on your part to take on too much credit debt. Instead, be selective and limit your credit account applications to the minimum you need to shop for the best rates and terms.

For information on obtaining your credit report, contact one of the three major credit-reporting agencies:

Equifax
800/685-1111
P.O. Box 740241
Atlanta, GA 30374-0241
http://www.equifax.com

Experian
888/397-3742
P.O. Box 2104
Allen, TX 75013
http://www.experian.com

TransUnion
800/916-8800
P.O. Box 1000
Chester, PA 19022
http://www.transunion.com

Teach your Children the Basics of Managing Credit