Boosting Your Credit Score
If you have applied for a loan at the Credit Union recently, you may have heard of credit scores or Beacon scores. Everybody has one, but few people really seem to know what they are. Basically, a credit score is a statistical summary of a credit report - a number assigned to indicate the overall health of your credit. As Experian explains on their web site, "Risk scores (also known as credit scores) are created by computerized risk 'models' that use a series of mathematical steps to assign numerical values to various pieces of credit information. The result is a number - the risk score - that predicts your future payment pattern."
Many financial institutions, including Multiple Employees Group FCU, use credit scores to facilitate faster, and more objective loan decisions as well as to reward members who have excellent credit with lower rates. Credit scores help members by allowing the credit union to speed loan decisions and reduce the cost of loans by cutting the research necessary to process applications.
The five main factors evaluated in calculating your credit score are: your payment history, how much you owe, length of credit history, new debt and/or new accounts and your "mix" of credit. The best way to improve your credit score is to follow the credit advice you've heard for years: don't abuse credit, don't carry high balances on revolving credit, and pay your bills on time.
In addition, consider these other tips to keep your credit report - and your credit score - healthy:
 | Know what's in your credit report. Keep an error-free report. Georgia law requires all three credit bureaus to provide you a free copy of your credit report two times a year. Call Experian at 1-888-397-3742, Equifax at 1-800-997-2493 and TransUnion at 1-800-888-4213 to receive a copy of your report. (You can't order your free copy over the internet.) |
| Don't have more credit available than you need. Even people who have an unvarnished credit history may run into trouble if they have too much credit available. Don't carry five different oil company cards when you only use two. You may be surprised to find out how much credit you have access to at any given time. For example, if you bought furniture on a 12-month-no-interest special, you may ha a generous outstanding line of credit with the finance company., Too much available credit could allow you to get in debt quickly - and this risk may lower your score. Close any accounts you won't use and be sure to inform the credit bureaus. |
| Keep credit inquiries to a minimum. Too may credit inquiries in a short period of time sends up a red flag to some companies and could lower your credit score. Be especially careful of car lots. If a salesman wants to carry your drivers license to the office, you may find later that your credit has been checked by several finance companies in the short period of time that it took you to take a car for a test drive. Apply for the credit cards you are sure you will use, but resist the urge to apply for every department store card that offers a one-time 10% discount for applying. |