What is a credit score?

Financial institutions use a numerical rating called a credit score to determine how you will pay debt. A high credit score suggests to financial institutions that you will make timely loan payments. A low credit score indicates that there is a higher risk that you will not repay a loan. Your credit score can affect not only if you can qualify for a loan, but also the interest rate you may pay on the loan.

What can you do to strengthen your credit score?

  • Make sure you pay your bills and debts on time.
  • Minimize credit card account balances compared to your credit limits. A good rule of thumb is that your balance on a credit card should not exceed 30% of credit limit.
  • Make paying down or paying off your loans and credit cards a priority, before adding new debt.
  • Opening lots of new credit cards in a brief period of time can hurt your credit score.
  • Shop for credit only when you need it. Making numerous applications for loans may lower your credit score.
  • Monitor your credit report.

How can I obtain a credit report?

You are entitled to one free credit report per year from each of the major credit bureaus – Equifax, Experian and TransUnion. The three national credit bureaus have a centralized website, so you can order your free annual reports in one place. Do not contact the three national credit bureaus individually. Visit AnnualCreditReport.com to order your free credit report. Your credit score will not be shown on the report, but the report allows you to determine that your payment history is reflected accurately.