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Understanding your credit score

Your credit score is a number that represents the risk a lender takes when you borrow money. A FICO score is a well-known measure created by the Fair Isaac Corporation (FICO) and used by credit agencies to indicate a borrower's risk. The average American has a credit score of 700 which is considered good. A score of 800 is considered to be excellent. The majority of credit scores fall between 600 and 750.

Your credit score can be used to impact:

  • Loan amounts, interest rates and approval
  • Credit card approval
  • Home and rent approvals
  • Car insurance rates
  • Cell phone contracts
  • Job offers
  • Private student loans
  • Established utility service

What hurts my credit score?

  • Missing payments, regardless of dollar amounts it can take up to 24 months to restore credit of one late pay
  • Credit cards at capacity (maxing out credit cards)
  • Closing credit cards out
  • Shopping for credit excessively
  • Opening up numerous trades in a short time period
  • Having more revolving loans in relation to installment loans
  • Borrowing from finance companies
  • Transferring balances

What doesn’t affect my credit score?

  • Debt ratio
  • Income
  • Length of residence
  • Length of employment
  • Criminal record or personal information

How can I improve my credit score?

  • Pay down on credit cards, keep balances low and pay off debt
  • Pay your bills on time
  • Do not close unused credit cards
  • Do not apply for too much new credit
  • Only open credit card accounts that you really need.
  • Dispute any inaccuracies on your credit reports
  • If you are in collections and you pay off the amount due, it remains on your credit report for seven years.
CCCS Credit Scoring Graph