Financial Resource Center

Credit


To Build Credit, Check Your Score

by Laura Varela / July 9th, 2020


Getting and maintaining a good credit score is one adulting skill really worth learning. Half of college students don’t check their credit score. Some don’t have one to check—about 20% of people between the ages of 18 to 22 don’t have a credit score, according to credit rating company VantageScore. 

A credit score is a three-digit number ranging from 300 to 850 that helps lenders, landlords, or potential employers assess your credit risk. It’s generated by information in your credit report from each of the three major credit bureaus: Experian, TransUnion, and Equifax. 

Your score is one of the most important numbers tied to your financial name. Whether you’re applying for a loan, buying a house, determining interest rates, or even job-searching, your credit score carries serious weight. 

To learn more about your credit score and give it a boost, understand: 

  • What makes up a credit score — Payment history, amounts owed (especially as a percentage of credit available—the utilization factor), length of credit history, new credit, and types of credit in use determine your credit score. 
     
  • How to get your credit report — You can request one free credit report a year from each of the three major credit reporting bureaus by visiting Annual Credit Report.com, the only website authorized to provide these free reports. 
     
  • How to improve your credit score — Pay all bills on time, every time. Also consider using a secured credit card. That’s a card which requires you to put a certain amount of money in a savings account. Your spending limit will be whatever you have in your savings account. It’s like a debit card, but your transactions get reported to the credit bureaus and help you develop a credit history. Check with your credit union about setting up a secured card. 

More ways to boost your score:

  • Keep a low credit utilization ratio.  Don’t use more than 30% of your available credit, and don't charge more than you can pay in full when the bill arrives. 
     
  • Avoid opening many new accounts in a short time period. This can send a red flag to lenders that you are taking on new debt—and temporarily lower your score. 
     
  • Keep existing credit lines open, even if you’re not regularly using a credit card.  Do not close it right before you apply for new credit. Closing cards can shorten your credit history and affect your credit utilization rate—thus lowering your total credit score. 
     
  • Pay your fines.  Whether it’s a parking ticket or a library fine, pay up. If debts are reported to a credit reporting agency, they can knock down your credit score.

Earning a good credit score and keeping it above 700 is a seriously good life skill to learn and will make adulting a little easier.

 

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