Understanding Your Credit Score

Your credit score - these three numbers carry so much weight when it comes to whether or not you will be accepted for a loan or a credit card. And yet, there are so many questions revolving around the all important credit score and how it is determined for everyone.

At its core, your credit score is used to tell banks, credit card companies, or other lenders to determine whether or not you have proven to be reliable with credit repayment over time. Depending on who you ask, a credit score that is considered “good” can sit at 670 or above. The average credit score in the U.S. is 669.

We’ll help you better understand your credit score by taking a look at the factors that affect your score, how your score can affect you, and how you can bring your credit score up.


What Factors Influence My Credit Score?

Understanding how and why your credit score goes up and down is important for improving that score.


  • Payments - Your payments on loans or credit cards greatly affect your score. Paying late, even just once, can make your score drop. In addition, making payments on time consistently will certainly make your credit score rise more quickly.

  • Debt - If you carry large amounts of debt on your credit cards or if you consistently max-out your cards, your credit score will likely suffer for it.

  • Length of Your Credit History - The longer you’ve had active credit cards or loans, the better. Even if you make all payments on time, the length of your credit history could be bringing down your score.


How Does my Credit Score Affect Me?

If you plan on purchasing a home or car or intend on opening other lines of credit in the future, your credit score plays a huge role.

If you are searching for an apartment, landlords are more likely to accept you as a renter if your credit score is above average. Likewise, banks or other lenders are less likely to approve you for a loan if your credit score is lacking.

Even if you are accepted for a loan, your interest rate will be higher than it could have been if your credit score was improved. Finally, having low credit can hinder your ability to apply for and receive credit cards with higher limits and better benefits.


Tips to Help

Even if your credit score is less than stellar, there are several ways you can work toward bringing it up.


  1. Pay your bill on time, and avoid only making the minimum payment. This is the quickest way to raise your score.

  2. Do not max out your credit card limits each month. It’s best to have credit cards, but only use between 10-30% of your credit allotment each month.

  3. Keep credit cards open even if you no longer use them for purchases.


Did you know that CNE offers credit score counseling? Call us at 423-765-6201 or email at info@cneinc.org to get started and have your questions answered.