And the Oscar goes to . . . Your Credit Score!

by Janice Forostiak, Marketing Department

An award-winning credit score can take years to build . . . and a few bad months or years to destroy.

Do you know your credit score? We’ve all seen those cute TV ads featuring the men in pirate hats — we probably even know the song by heart. But it’s a good idea to listen to what they’re saying and take action. Here’s why: many lenders are basing loan rates and terms on your credit score.

What is your credit score? Simply put, it captures your financial picture in a quantitative way, taking into consideration your payment history, lines-of-credit available, outstanding balances, and much more. A good credit score can make the difference in getting a loan to buy a house, car and many other items.

So, what is a Good Credit Score?It depends! Each lender decides how to use these numbers. But here are some basic guidelines:

760 – 850: Excellent
720 – 760: Very good
680 – 720: Average – very good
620 – 680: Fair – poor
Below 620: Poor

How do I get a copy of my credit report? It’s good to know what prospective lenders are looking at when it comes to your financial picture. You can get a free copy of your credit report today by logging onto www.annualcreditreport.com. This central site allows you to request a free credit report once every 12 months from each of the nationwide consumer credit reporting companies: Experian, Equifax and TransUnion.

So what happens if you have a less-than-stellar score? Life is not over, and that score CAN be improved! But you have to take some steps to do it.

How do I rebuild my credit score? Bankrate.com has a few suggestions:

1) Correct errors. There are plenty of reasons that your credit report isn't accurate. Perhaps your identity was stolen, or you paid off a debt but the creditor never reported it.

To correct an error, submit details of the error in writing, including corresponding documents, to the credit bureau that's recorded the error. It has 30 days to investigate and make a determination about its accuracy, the Federal Trade Commission says. If a mistake gets scrubbed from your credit report, you could see your score jump by 50 to 100 points.

2)Pay down your balances. Thirty percent of your credit score is based on your credit utilization ratio -- the amount of credit you've used compared to your limit. If that ratio is higher than 30 percent, it's going to have a negative impact on your credit score. Put a big chunk of cash from a savings account or tax refund toward your debt to lower that ratio and boost your credit score.

3) Start automating payments. Improving your credit starts with paying your debt on time. If late or missed payments have led to bad credit, it's easy to make sure your bills are paid automatically and on time. Set up electronic payments to pay off credit cards, mortgages and other debt. This will ensure you never miss a payment and improve your credit score.

As always, your credit union branch representatives are always on hand to assist you in understanding your credit score and ways to help you trim debt and improve your financial position. Put us on speed-dial and we can help you work towards a better financial picture!