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Unless you plan on paying cash for a home, vehicle, or other big purchase, getting to know your credit score is a must. Even if you never borrow money, your credit health can influence where you live, how much you pay for certain services, and if you receive a job offer from your dream employer.

Credit scores are the numerical summary of your credit behaviors. FICO® and VantageScore® are the two main credit scoring agencies. They use the data in your credit history reports to calculate your score, which usually ranges between 300 and 850. While each scoring agency uses different proprietary credit scoring models, both agree that higher scores represent stronger credit histories.

Whether in the form of a numerical score or a detailed report, a strong credit history tells potential lenders, employers, landlords, and service providers that you have a history of financial responsibility. Here are a few examples of how they might use the information:

  • Lenders offer the lowest interest rates and most favorable repayment terms to borrowers with the highest scores as long as they meet other eligibility requirements.
  • Potential employers may request access to credit history reports before extending an offer of employment.
  • Service providers, such as cell phone companies, use your credit history to determine product or service financing eligibility. Customers with good credit can gain access to cell phones and other devices without paying deposits or committing to prepaid plans.
  • Insurance companies may use your credit history to decide on underwriting approvals and determine premium amounts.

Your credit score represents the data in your credit history reports, so focus on the behaviors that credit bureaus track to make progress in improving your score.

  • Start by requesting copies of your credit history reports from each of the main credit reporting bureaus at AnnualCreditReport.com. This website allows you to order a copy of your credit report from Experian, Equifax, and TransUnion at no charge. Vermont Federal members can instantly access credit reports and credit scores when they log into their online banking account or mobile app.

    Review each report for errors. If incorrect information exists, follow the bureau's dispute procedures to make the correction.
  • Improve your credit health by paying bills on time and keeping balances below 30% of the credit limit. These two behaviors carry the most weight when calculating your credit score.
  • Use your cash management skills and rental payment history to boost your credit score. 
  • The next time you apply for credit, request that an UltraFICO® Score be used in the decision process. The algorithm adjusts your traditional FICO® Score by factoring in how well you've managed your accounts at financial institutions.
  • Do you consistently pay your rent on time? FICO® Score 9 will factor in this information, but only if your landlord reports it to the credit reporting bureaus.

Take charge of your financial future by understanding the basics of credit and using that knowledge to improve your credit score.

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