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Small business is important to Central Oregon, and to Mid Oregon. Find tips and resources for business, and information about Mid Oregon’s commercial services and business members.
What Makes Up Your Credit Score?
Your credit score is a significant gauge to your financial wellbeing. Understanding why your credit score is important will help you use your credit wisely, and as a helpful financial tool (Read Why Your Credit Score is Important article). Knowing what makes up your credit score is the key to improving a poor score, or to start out using credit better.
What Makes Up Your Credit Score?
FICO® credit scores are calculated from many different pieces of data in your credit report. This data is grouped into five categories shown below. The percentages reflect how important each of the categories is in determining how your FICO® Score is calculated. The number generated is how your credit situation is in relation to these factors, and that number will be between 350 and 850.
Payment history- 35%: “Do you pay your bills on time?”. On time payments will raise this factor, while missed payments and defaults will lower your score. This is the most important contributor, and one you can best control.
Amounts owed to creditors-30%: “Do you owe a lot of money to a lot of people?” Owing money on credit accounts doesn’t necessarily mean a problem, but using most or all of your credit limits could be a sign of problems, and the formula treats it accordingly.
Length of credit history-15%: “How established is your credit history?” In general, a longer credit history will increase your score. The age of your oldest open account, the average age of all accounts, and how long it has been since you’ve used your accounts are factors.
New credit-10%: Are you increasing your debt obligations? Borrowers opening several new accounts in a short period of time has shown to be a bigger risk to lenders.
Types of credit currently in use-10%: “Do you have a ‘healthy mix’?” Your balance of credit cards, installment loans, retail accounts, and mortgage loans are considered by the formula. It’s not necessary to have all types of credit, but a healthy mix is good (For example, only having credit cards is not a good balance).
FICO Scores Are Unique to You
The importance of credit categories varies by person. Your FICO® Scores are unique, like people are unique. They are calculated based on the five categories referenced above, but according to FICO®: “…for some people, the importance of these categories can be different. For example, scores for people who have not been using credit long will be calculated differently than those with a longer credit history.”
Over time, the information in your credit report will change. As they do, so does the evaluation of these factors in determining your FICO® Score.
According to FICO®, “Your credit report and FICO® Scores will evolve frequently. Because of this, it’s not possible to measure the exact impact of a single factor in how your FICO® Score is calculated without looking at your entire report. Even the levels of importance shown in the FICO® Scores chart are for the general population and may be different for different credit profiles.”
How To Find Out Your Score
So how do you know what is going on with your score? You can order your credit report at AnnualCreditReport.com. That will show the factors which go into your score. You can get your score from FICO® (myfico.com), for a price. There are some websites which can give you a credit score based on your FICO score, like Credit Karma.
But your best and easiest access to your credit score might be Mid Oregon Credit Union. Our members can check their credit score for free with Credit Savvy, inside our easy-to-access Digital Banking platform.
In addition to your score, Credit Savvy will provide the individual breakdown of the 5 categories. Included is how well you are doing in that category, what is impacting that category, and suggestions to improve. You can also see information which makes up your credit report, access offers from the credit union, and see articles in “Your Money Blog”.
Let us help you manage or improve your credit score. Visit MidOregon.com, or visit one of our Central Oregon branches to get started.
Why Your Credit Score is Important
How do you know if you have been using credit well? If you have difficulty making loan payments or are stressed over your debt, that is one answer. Another is your credit score. Understanding why your credit score is important will help you use it wisely, and as a helpful financial tool.
Credit is amoral, meaning it is neither good nor bad. It is the choices and actions of individuals that determine if it is a helpful financial tool or a recipe for trouble. Those choices and actions tend to be reflected in the grade you have.
What Is A Credit Score?
Investopedia has a good definition we can use:
“A credit score is a number between 300–850 that depicts a consumer’s creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.”
Looking at it a different way, your number represents your past use of credit, or lack of use. That information is then modeled into a number which represents how likely you are to repay your debts.
Although there are several different models in use, by far the most common is the FICO® score. The FICO® score, or similar scores based on the same model, are what you will most likely encounter.
Why Your Credit Score is Important
Lower borrowing costs. A higher number usually means lower interest rates and payments, and more favorable terms. It can also mean more control over what you buy and when.
Getting a job. Some hiring processes include a review of your credit score. A low score may keep you from being considered for a financial, retail or other sensitive position.
Buying Insurance. Almost all insurance companies now factor your score when calculating your premium payments, so good credit will save you money on your auto, home, and/or renters insurance.
Starting a Business. If you’re thinking about starting a business and need a business loan, your number and history will factor into your eligibility for small-business financing.
Mid Oregon Can Help!
Understanding the significance of your credit score is the beginning to managing it well. While good savings habits and spending within your means are crucial to financial wellbeing, your score is both a symptom of and a guide for how you manage credit.
Mid Oregon Credit Union helps our members understand and better manage their credit. Our loan officers can discuss ways to improve your number, access lower cost credit, and see if we can help with the debt you already have.
To learn more, visit midoregon.com, access our Contact Center at info@midoregon.com or call (541) 382-1795, or visit one of our Central Oregon branches.
Switch to No-Contract Wireless and Save!
If you think you’re paying too much for your wireless service provider, consider switching to a no-contract option. Love My Credit Union Rewards has just announced its newest discount partnership to bring Tracfone and NET10 no-contract wireless right to you.
With Tracfone, you’re in control with unlimited Carryover Data* that never expires. Choose from Americas Top 4G LTE** Networks, and without the contracts or mystery fees.
Or, live your best wireless life with NET10 Wireless. Choose from America’s Top Nationwide Networks or keep the one you love—all without a contract!
No contracts or mystery fees
When you get your service from Love My Credit Union Rewards, you’ll receive dependable service with no contracts, credit checks or mystery fees. And if you don’t love the service, you can switch anytime!
Get a top phone or keep your own!
Whether you’re an Android person or an iPhone fanatic, we have the latest phones for any budget. Love the phone you have? Keep the phone, number, and network you love with our easy-to-install SIM kits.
Find the brand that works for you
Visit the Love My Credit Union Rewards site to explore the different plans, and see the latest offers designed just for credit union members. Whether you prefer the value of carryover data or the go-anywhere freedom of unlimited talk, text & data, you’ll find the perfect fit.
About LMCUR
In 2008, CU Solutions Group recognized a need to offer credit union members the same kinds of special partner programs usually only available to big banks. That’s when it launched Invest in America, a program offering special discounts from U.S. automotive companies.
After that, the program quickly took off, and the name changed to Love My Credit Union Rewards. The program expanded its offerings to a wide range of U.S. companies.
Visit LoveMyCreditUnion.org to all the current rewards programs available now! Mid Oregon Credit Union provides additional resources through partner relationships. Check out our Mid Oregon Financial Partners page to see the latest.
*Service must be active and use within any six month period.
**Actual availability, coverage and speed may vary. See Terms & Conditions at Tracfone.com.