Sometimes it IS All About the Numbers!

Check your score each year to make sure you’re getting an accurate rating

YOU PROBABLY KNOW how much money you have in your bank account and how much you have charged to your credit card. It’s important to keep track of those figures. But if you don’t know your credit score, you’re not alone. Many people don’t. Yet this three-digit number has a significant impact on your finances.

sometimesIn general, credit scores range from 300 to 850 and are based on your credit history. Companies use them to help decide whether or not to lend you money, determine the rate of interest, or issue you a credit card. If you’re considered a low risk, you’ll obtain favorable rates; if you’re viewed as a high risk, you’ll pay more.

The three major credit bureaus are Equifax, Experian, and TransUnion. Each issues its own scores, so consumers actually receive three scores, which can vary slightly. In a recent survey, only 31% of respondents said they had ordered their score in the past year. If you haven’t ordered yours, now is a good time to do so and learn how creditors are making decisions about you. Carla Berry, Paducah Bank Senior Vice President, says to “think of your credit report as your financial reference.”

MAINTAINING A GOOD SCORE
Consumers can keep their scores high by making payments on time, maintaining low credit card balances, keeping the same credit cards for a long time, and not opening too many new accounts.

And while there’s no magic number for what’s considered an excellent credit score, in the simplest terms, the higher your credit score, the better the rates you’ll get on all your financial products.

For example, anyone with a credit score over 680 can expect to receive competitive rates on mortgages, car loans, and credit cards.

With a lower score —say, 550—you’ll pay higher interest rates and more money for auto insurance.

IMPROVING YOUR SCORE
Many people feel their scores could be higher. According to Experian, the average US credit score is 677. The following tips will help you boost your score and keep it there.

  • Pay your bills on time. Late payments and amounts in collection will considerably lower your credit score. The longer you’ve been paying on time, the higher your credit score will be.
  • Get current with creditors. If you’ve missed payments because of financial difficulties, call your creditors and arrange to make up for missed payments as soon as possible.
  • Pay down balances. The less available credit you use, the higher your score will be. A good rule of thumb is making sure you have used less than 30% of your available credit.
  • Hold on to older accounts. Creditors like to see that you’ve had credit for a long time, so closing older accounts can actually work against you.
  • Open new accounts sparingly. Experts say you only need a few pieces of active credit, including your mortgage, a home equity line, and perhaps a car loan.
  • Know what credit bureaus are saying about you. Order copies of your credit reports at least once a year to make sure they include accurate information. If you find incorrect information on your credit report, immediately contact all three credit bureaus in order to dispute it.
  • Stop charging. Don’t let your debt get out of hand. If you need professional credit counseling, try the nonprofit National Foundation for Credit Counseling at www.nfcc.org or Green-Path Debt Solutions at www.greenpath.com.