Credit Education
.png?sfvrsn=9d165a1e_1)
What is a Credit Report?
Your Credit Report is like your financial report card. It shows your loan history — the last 7 – 10 years. This history includes inquiries, where you borrowed, how much you’ve used, and how and when you paid it back. Ultimately, it measures your credit worthiness and is used by organizations for applications. The idea is that the better your credit report, the better your credit score — which impacts your credit terms for loans.
What information can be found on a Credit Report?
Personal Information – name, address, social security number, and date of birth.
Credit Account History – open accounts, closed accounts, and account balances.
Payment History – record of on-time and late payments, as well as any accounts in collections.
Credit Inquiries – how many times you've applied for credit.
Public Records – information about bankruptcies, tax liens, or other public records that may affect your credit worthiness.
What is a credit score?
A person’s credit score indicates creditworthiness and impacts their ability to qualify for loans. Lenders use your credit score to decide whether to lend money to you and at what rate. When you have a higher credit score, you are considered “lower risk” and are likely to get better interest rates than those with low scores.
How is my score calculated?
Your credit score is based on five factors.
Payment history
How much you owe
Length of credit history
Credit mix
New credit
How can I improve my credit score?
There is no overnight fix for a low credit score, but there are steps you can take to improve it over time:
Make on-time payments. Pay at least the minimum due, but paying more is even better. If you’re having trouble making payments on time, set up autopay for at least the minimum due and create calendar reminders.
Don’t use too much of your available credit. To boost your credit score, try not to use more than 30% of your available credit on any credit card. Do not max out credit cards — this can really hurt your credit score.
Diversify the types of credit you have. Someone who manages multiple lines of credit such as credit cards, an auto loan, and a mortgage loan has a stronger mix of credit than someone with a single credit card. However, it’s not recommended to take on more debt than is necessary just to build credit.
Limit new lines of credit. When applying for a loan or credit card, the lender will run a hard inquiry on your report. This typically knocks a few points off your score. Be mindful that multiple inquiries in a short period of time could have a compounding negative effect.
In summary, managing your credit responsibly and consistently will help improve your credit score. Knowing the most up-to-date information about your credit is key. As a Stockman Bank customer, you have free access to CreditStory — a credit monitoring tool within Online Banking. With CreditStory, you have instant access to your credit score, receive daily credit monitoring with alerts, understand the factors that impact your credit score, and receive tips on how to improve your score to reach your financial goals.
Have more questions? Visit your local bank to learn more about how Stockman Bank can help you achieve financial success.
