Questions About Credit?

Date Posted: March 20, 2024

What is a credit score?

A credit score is a statistical formula that translates personal information from your credit report and other sources into a three­digit score. Credit scores can range between a low of 400 to a high of 850. In general, the higher your score, the more creditworthy you are to the lender and the less likely you will become delinquent on credit extended to you.

Credit scores are one of the primary tools a lender uses when determining the risk in lending money to you. Creditors use credit scores, among other things, to determine whether or not to grant you a mortgage (or credit) and if so, how much credit and at what rate.

What can I do to improve my credit score?

Pay all of your bills on time.

Paying late, or having your account sent to a collection agency, has a negative impact on your credit score.

Try not to run your balances up to your credit limit.

Keeping your account balances below 75% of your available credit may also help your score.

Avoid applying for credit unless you have a genuine need for a new account.

Too many inquiries in a short period of time can sometimes be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or overextending yourself by taking on more debt than you can actually repay. A flurry of inquiries will prompt most lenders to ask you why. However, most scoring formulas will not penalize you if, for example, you are shopping for the best car loan rate or mortgage rate.