Credit Scores 101: What They Are and How To Improve Yours
Learn what a credit score is, what factors affect it, and practical steps you can take to improve your credit score and strengthen your financial future.
Most of us know our credit score is important, but what exactly is it? Your credit score is based on your financial history and represents your creditworthiness. Lenders, landlords, and utility providers use it to gauge your financial responsibility before offering a loan, services, or even an apartment.
What Is A Credit Score?
A credit score is a three-digit number that reflects how you manage credit. It is calculated using factors such as total debt, payment history, length of credit history, and the types of credit accounts you have used. The score helps lenders determine how likely you are to repay borrowed money.
Standard credit scores range between 300 and 850, and the higher the number, the better. Anything in the mid-600s or higher is considered a good score, while anything below 600 is considered poor. Credit scores in the mid-700s and above are considered excellent.
A higher credit score generally means you’re more likely to be approved for a loan or line of credit. It also improves your chances of securing a better rate.
What Affects A Credit Score?
Credit scores are calculated based on multiple factors, but they generally include:
How Can I Improve My Credit Score?
If you’re looking to improve your credit score, consider these tips.
You may also want to consider enrolling in a service that monitors your credit and provides updates on your score. BCU members, for example, can sign up for the Free Credit Score Tool.
Asking the question, “What is a credit score?” and understanding what factors impact your score can help you prepare for your next big financial milestone. From a small car loan to your first first mortgage, boosting your credit score can help set you up for a better financial future.
Ready to experience the credit union difference? Become a member of BCU!
About BCU: BCU is a not-for-profit, member-owned credit union that is fiercely dedicated to Empowering People To Discover Financial Freedom. With over $6B in assets, BCU is committed to providing a fast, easy, and secure banking experience along with extraordinary service to more than 360,000 members. The BCU field of membership includes employees and their families from Fortune 100 companies across the US and Puerto Rico. Membership is also open to individuals who live or work in Northern Illinois, Southern Wisconsin, and Puerto Rico, as well as subscribers of BCU’s wholly owned Credit Union Service Organization (CUSO), Life. Money. You.®. All BCU members enjoy lifetime access to financial services and well-being programs that inspire confidence through the brand promise “Here Today For Your Tomorrow.”
To learn more about how we can help you realize your financial dreams, visit BCU.org. For media inquiries, visit BCU.org/About-Us/Media-Relations.
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