What is a Credit Score?

Credit scores are measured on a scale of 300 to 850. Your credit score is a representation of how much debt you have, your credit risk, and your likelihood of paying a bill on time. A few factors contribute to determining this, such as how many lines of credit you have and your financial records.

The breakdown of what affects your credit score looks something like this:

• 10% – Types of Credit Used
• 10% – Recent Credit Changes
• 15% – Length of Credit History
• 30% – Amounts Owed
• 35% – Payment History

You may also see credit reports labeling your score in a range from poor to excellent. These numbers also fluctuate from company to company. For example, an Experion score of 620 would be considered “Fair’, while NerdWallet categorizes it as “Bad”. Talk to a financial expert to get an idea of your specific breakdown.

How Do I Get My Credit Scores?

There are three major credit reporting agencies: Experian, Equifax, and TransUnion. They are each required to give you a free report once a year. There are also plenty of companies that will give you regular checks on your credit score–either for a subscription fee or for free, depending on the features you use and how often. You can also check your credit card or loan statements. Many financial companies provide this information for their customers, either on their paper bill or via their online accounts.

What If My Scores are Different or Fluctuate?

Many people don’t realize that you have more than one credit score. Actually you could have hundreds of different scores at once! It’s not a miscalculation by one reporting agency or another; different companies use different methods of calculating your final score. Personal or financial changes like taking out more credit or paying off credit, going an extended time without making changes to your debt, changing your personal information, and many other reasons cause your credit score to fluctuate.

It’s important to understand that fluctuations are very common and completely normal. Unless you notice a drastic change that does not rebound, there is no reason to be concerned.

What Can I Do If I Need to Raise My Credit Score?

Short of paying off all your debt in one fly sweep, there’s no quick fix. In general, follow these basic steps:

• Pay your bills on time
• Work on paying off your debt
• Keep the balances on your credit cards low
• Apply for new credit only as you need it
• Don’t close unused credit cards (as long as they do not cost you additional fees)
• Dispute any inaccuracies on your credit score

A bad credit score is not something that needs to stick with you forever. Improving your credit will not happen overnight, however, it’s a process. If you’d like help improving your credit, contact one of our helpful Falcon National Bank specialists.