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Understanding Credit & How to Improve Your Score

Understanding Credit & How to Improve Your Score

An extremely important aspect of your financial well-being revolves around understanding credit. Not only does it affect your ability to qualify for a loan, but also the rate you’re eligible to receive. When credit is used wisely, it becomes an important asset to your everyday financial life. However, credit use comes with high stakes: if you don’t repay the agreed amount on time or apply for too much credit in a small time window, it can greatly impact your credit score. That means having increased difficulty applying for credit.

Credit Overview

When applying for a loan, lenders want to understand the risk they are taking by providing you with their money. They take into account factors such as your income, current level of debt, and your employment history. They often look at your credit (or FICO) score to gauge how reliable of a borrower you are. The more history you have of being able to pay off your debt on time, the better your score will be. There are other factors that impact your credit score you’ll want to pay attention to:

  • Your payment history
  • Your credit usage
  • The length of your credit history
  • Your credit types (credit card, student loans, etc.)
  • Recent credit


Improving Your Credit Score

If you find that your credit score is lower than you’d prefer it to be, or that it’s preventing you from qualifying for loans and good rates, the following steps may help improve your credit score.

  • Make your payments on time
  • Establish a long-term account with a reputable credit card company
  • Don’t take on more debt that you can handle
  • Don’t get caught up in credit repair scams
  • Speak to a loan officer about how to build your credit through our Credit Builder Loan

 

Free Credit Reports

Consumers are eligible to receive one credit report each year, free of charge.
You can request your free credit report in these two ways:

This is the only authorized source for consumers to access their annual credit report online for free. Be sure to order from the agency listed above. If you go directly to the credit reporting agencies, you may be charged.

 

Fixing Errors on your Credit Report

If there are errors on your credit report, you may take the following actions:

  1. Write to the consumer reporting company and explain what information is inaccurate.
  2. Credit bureaus will review the documentation and, if further investigation is required, they will provide a copy to the source that furnished the disputed information to them.
  3. The source will then review the information and report back to the credit reporting company.

 

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