March is National Credit Education Month! To celebrate, we’ve compiled some basic information on understanding your credit rating, along with some tips on how to improve your score.

Credit Score

A credit score is a number between 300 and 850. It is comprised of various data, including your payment history, balances owed, types of credit usage, and the length of your credit history. The higher a credit score, the better. Credit scores are listed on a consumers credit report. Potential creditors use this information to estimate whether a borrower will pay back a loan. Being creditworthy makes it easier to rent an apartment, buy a house, or even land a job.

Building Your Credit

Your credit rating is essentially a formula created with various factors that can have a negative or positive impact on your life. Of course, making on-time payments is crucial to maintaining a good credit score, but consumers should note that using credit wisely is also a big factor. Loans and credit cards are the most common types of consumer credit. The proper use of these accounts can help build a strong credit history. For people without a credit history, start by applying for a Share Secured Loan. This loan requires an initial deposit, which is then held as collateral by the credit union, until the obligation is repaid. The borrower benefits from receiving positive payment history by making each loan payment on time.

Opening a secured or low-limit credit card is another strategy for establishing your credit. Credit cards are considered to be a revolving account, because the card stays open from month to month. When using a credit card, keep an eye on your utilization ratio. This is the amount of credit you have used, in comparison to the limit given on the card. A good rule-of-thumb is to use less 30% of your available credit. For example, if your credit limit is $1,500, only make charges equaling to less than or equal to $450. Using too much of your available limit can negatively impact your credit rating.

Maintaining a Good Credit Score

To maintain a good credit score, practice the following habits:

  • Avoid late payments! Paying on time can have the greatest impact on your credit score.
  • Keep your credit card utilization under 30%. Creditors want to see that you can use your credit limit wisely.
  • Avoid having multiple inquiries and opening multiple credit accounts within a short period of time. New applications for credit should have a buffer of at least six months.
  • Use your credit! Without a current history, there is nothing to base your credit score on.

Building and maintaining a healthy credit file can take serious effort and commitment, but it’s one of the most crucial elements of a financially responsible life. To review your current credit standing, visit to get your free credit report.  Also, check out our financial education page for interactive financial coaching tools, articles, calculators, and much more!



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