Understanding Your Credit Score

If your credit score is low or you want to improve it, there are several strategies to consider. But first you will need to understand how your score is calculated.

Check out your score by accessing SavvyMoney through Ascentra’s Digital Banking platform on our website at ascentra.org or mobile app. SavvyMoney is free to members, provides financial resources and allows you to refresh your score every 24 hours without impact. It’ll also give you suggestions on how you can save money.

VantageScore, the company that generates SavvyMoney’s scores, uses five major categories of information:

1. 40% is based on your payment history
2. 21% is the age and type of credit you have. 
3. 23% is your credit usage. 
4. 11% is based on total amount of recently reported balances on your credit accounts. 
5. 5% is based on recent credit applications. 

Tip: Don’t worry about submitting multiple applications when shopping for a mortgage or car loan. All inquiries within a 14-day period count as one.

If you want to raise your score, you can do a few key things.

• Pull your credit reports. TransUnion, Equifax and Experian allow one free copy of your report each year. With SavvyMoney you have access to your report and score daily.
• If you find an error on your report, dispute it. 
• Pay your bills on time. 
• Pay down credit card debt. Try not to use more than 30% of your credit limit. 
• Hang onto old cards. Your credit score benefits from long relationships with lenders, so cut them up, but don’t cancel them.
• Be thoughtful about shopping for new credit. Every time you apply for a new card or loan, the lender looks at your credit history, which dings your score.
• Diversify your debts. A mix of credit accounts shows that you can manage debt from multiple sources.

Time and patience are key to improving your score. It may take 12 to 18 months depending on where you start but maintaining a good credit score will help you save on future loans and credit cards, so it worth the effort. For further assistance on improving your credit score, contact an Ascentra representative at 563-355-0152 or by clicking the “Let’s Talk” bubble on our website.

Article content provided by Jean Chatzky, SavvyMoney