Your credit score is a snapshot of your financial picture at a particular point in time. The higher the score, the more likely lenders, landlords, employers and others see you as a good credit risk.
Scores are generated by statistical models using elements from your credit report and sometimes from other sources, such as your credit application. However, scores are not stored as part of your credit history. Rather, scores are generated at the time a lender requests your credit report and are included with the documentation.
How a typical credit score is determined
The five areas considered and the weight given to each in the calculation of your credit score are:
- 35 percent is Payment History: Details regarding payments made on credit cards, retail charge cards, installment loans and mortgages play a part here.
- 30 percent is Amount Owed: About 30 percent of your score is impacted by the amounts outstanding to creditors. Owing on many accounts won't necessarily hurt your score. If you're at or near your limit on your credit cards and other "revolving credit" account, however, your score can start to drop.
- 15 percent is Length of Credit History: In general, a credit report containing a list of accounts opened for a long time will help your credit score.
- 10 percent is New Credit: Opening several new credit accounts in a short period of time can lower your credit score. Also, multiple credit report inquiries can represent a greater risk. To compensate for rate shopping when it's time to look for a new car or house, the score counts multiple inquiries for the same type of loan in any 14-day period as just one inquiry.
- 10 percent is Types of Credit in Use: Your mix of credit cards, retail accounts and mortgage loans is considered here. Having different types is generally better for your overall score.
What you can do to improve your credit score
Bellco offers a number of different tools to help you learn more about your credit score and ways to start improving yours if it's not where you would like it to be.
Branch Financial Check-up: Visit a Bellco branch near you and sit down with a Financial Specialist to review your credit report in-person.
Mpowered: Bellco has partnered with Mpowered, a local nonprofit, to offer affordable credit coaching for Bellco members. Get your report and score from all three bureaus along with expert analysis and coaching. Mpowered also offers a free online credit education tutorial, and various resource guides, blogs and videos on important credit topics.
AnnualCreditReport.com: Under the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), you can annually obtain one free credit report from each main credit reporting agency (Equifax, Experian, and TransUnion). Simply visit AnnualCreditReport.com or call 1-877-322-8228 for more details.