Understanding & Improving Your Credit Score

Your credit score is one of the most fundamental aspects of your personal finances and the health of your financial standing. Yet, while most individuals understand its importance, few really understand the core points of what affects your credit score on


WEBWIRE – Tuesday, January 22, 2013

Your credit score is one of the most fundamental aspects of your personal finances and the health of your financial standing. Yet, while most individuals understand its importance, few really understand the core points of what affects your credit score on an ongoing basis, and how to take the right steps to improve your credit score, both immediately and over the long haul.

As a local credit union, serving much like a community bank with additional benefits, weíre committed to providing our members with as much information and security as possible. With this quick guide, youíll learn about both, helping you to get the New Year started off in a positive financial direction.

Your credit score really consists of 5 core components, in different ratios, giving more importance to some areas than others:


Additionally, different time periods have a different weight or bearing on the end result. The current and previous 12 months accounts for 40% of your score; 30% gets allotted to 13-24 months prior; 20% to 25-36 months prior; and 10% for more than three years ago.

Itís also important to know what doesnít affect your credit score, because people have misconceptions here as well. Primarily, neither your debt ratio, nor your current income, has a bearing on your credit score. Neither does your length of current residence or length of employment. However, these factors do come into play when youíre being considered for a loan, so they shouldnít be completely ignored.

In terms of improving your credit score, the first step is to steer clear of the factors that immediately lower your score, including:


From there, you can improve your credit score with these strategies:


Finally, hereís a quick cheat sheet for your credit score:


Keeping all these things in mind will help you to better understand and improve your credit score. If more information would help, a BFG Federal Credit Union representative is always ready to help. Call toll-free 800-306-4400 or visit www.bfgfcu.org.



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