Financial Education

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What does your credit score say about you?

Blog Post
2 min read
person holding a tablet with a credit score meter on the screen

If you hope to make an excellent first impression on potential creditors, lenders, landlords, and employers, then focus on your credit score. Making eye contact and smiling could sway the way people feel about you, but those behaviors bear no reflection on your ability to handle money well. Past credit behavior says more about you than body language ever could — at least to organizations that might loan you money or grant you access to their products and services.

Here’s what you need to know about credit scores and how to make yours work for you.

What Is a Credit Score?

Credit scores are a three-digit representation of your ability to manage your finances. FICO® and VantageScore® are the most well-known scoring agencies. They use proprietary formulas to calculate your score, which may range between 300 and 850, using data from at least one of your credit history reports — Experian, Equifax, or TransUnion.

Creditors and others you make payments to, such as landlords and mobile service providers, can report your payment history to a credit reporting bureau (or all three). Creditors are likely to report payment history monthly, while other entities may only notify bureaus if you ask them to or if your account is sent to collections.

5 Credit Scoring Factors

Five credit behaviors influence your credit scores. The weight given to each varies by credit scoring agency and the requested credit model. For example, Lender A might prefer FICO Model 4, which uses TransUnion’s data, while Lender B uses FICO Model 2, which uses Experian’s data. Multiple models exist, and each emphasizes specific credit scoring factors.

Despite the differences, credit scoring agencies consider these behaviors key indicators of your ability to handle credit responsibly:

  • Payment history – On-time, missed, and delinquent payments
  • Amount owed – Account balances compared to total available credit
  • Length of credit history – The age of the most recent and oldest credit accounts
  • Credit mix – The diversity of accounts in your report (e.g., revolving credit, installment loans, etc.)
  • New credit – Recent credit applications, credit limit increases, and new credit lines

While each factor effects credit scores, consumers who want to maintain good scores should focus on:

  • Making on-time payments – Creditors typically report missed payments as those not received within 30 days of the due date. Other non-credit based accounts, like medical bills, mobile services, and rent paid to a landlord, can also harm your credit history if they become delinquent.
  • Keeping account balances low – Credit scoring agencies recommend consumers keep balances below 30%. Balances near account limits may indicate that a potential borrower will soon be overextended and unable to repay those credit lines as agreed.

Ensure interested parties see an accurate representation of your ability to handle finances by monitoring your scores. SAFE FCU members enrolled in Online and Mobile Banking have free quarterly access to their FICO® scores. Not enrolled in Online Banking? Self-enroll today!