What is a credit score, and how can I find mine?
Your credit score appears on your credit report. The score can directly determine the interest rate you may pay on a loan. This score can approximately range from 380 – 830 (the higher the better).
How is my score calculated?
Your credit score is derived from five basic items:
- 35% – payment history
- 30% – capacity (capacity is revolving balances versus limits)
- 15% – length of credit
- 10% – accumulation of debt in the last 12-18 months (how fast are you adding new debt)
- 10% – mix of credit (installment debt versus revolving)
Can you help me understand my credit report?
Yes! We would appreciate an opportunity to review your credit report, which may result in saving you money by lowering your payments and rates.
What other tips do you recommend?
Bills are on everybody’s mind. Paying bills is an inevitable and sometimes unpleasant fact of life; however, not paying bills can create an even bigger problem.
If you are experiencing or have experienced significant difficulties paying your debts, you know that the situation is a personal catastrophe. Recovery in such circumstances may take years, but there are some steps you can take to ease the restoration of an acceptable credit rating.
1. Contact your creditors and your credit union. Be up-front about your problem and try to negotiate a payment schedule that is acceptable to you and your creditors.
If you show a good-faith willingness to repay your debts, most of the time you will find companies willing to assist you.
2. Bankruptcy. Although declaring bankruptcy may be unavoidable under certain circumstances – catastrophic illness or medical expenses, for example – it should be your last resort.
Ultimately, declaring bankruptcy can slow credit rebuilding much more than slowly paying off bills. And, bankruptcy remains on your credit report for 10 years and is a court action that remains on public records forever.
3. Secured loans and credit cards. One way to rebuild credit following a period of bill-paying problems is a secured loan or a credit card. “Secured” simply means that your savings are being held in a special account as collateral for the line of credit.
This money will be returned to you once the debt is paid or the credit card account is closed. This process allows you to demonstrate that you have recovered from your credit problems and can be trusted to pay your bills.
Also, good repayment performance may mean increases in the future.
4. Your credit report. Credit bureaus must provide you a copy of your credit report at any time for a nominal fee. You have the right to challenge any and all data in the report you feel may be in error.
Ask us about the steps you can take to correct the information and for the contact information for the credit bureau’s).
How can I learn more about credit and other financial education information?
We partner with Bank On Hampton Roads, a free adult financial education program.
Protect yourself by reviewing your credit report at least once a year.
Visit each www.annualcreditreport.com for sign up for your free credit report. You may pull one report from each bureau once a year.
Please read “Take Control and Protect Yourself from Identity Theft” (this is a PDF) for more information.