What is the purpose of a credit score? A credit score is used by lenders to determine the likelihood that you will have a 90-day late payment. It uses weighted measures of your current and past credit situation.

What is important in determining a credit score? Thirty-five percent of the score is based on your payment history. Thirty percent is based on how you use credit currently. Fifteen percent is based on the length of your credit history. Ten percent is based on the types of credit you use. The final ten percent is based on how many credit inquiries you have.

• Payment History - 35% - includes number of past dues items, how long they were past due, the most recent past due occurrence, whether there are bankruptcies, and the types of accounts past due.
• Credit Use - 30% - includes how much you owe, the proportion of your credit to what you owe andthe types of accounts.
• Length of Creit History - 15% - includes the time since an account was opened (the longer, the better,) and the time since the last activity.
• Types of Credit Used - 10% - includes credit cards, retail accounts, installment loans, consumer finance accounts and more. Finance cards result in lower scores.
• Credit inquiries - 10% - includes the number of inquiries, the type of inquiries and the frequency of the same types.

Where can I establish new credit? Consider starting with your bank or credit union. If you have an account, you are already a customer andall banks and credit unions offer credit cards. Consider getting a secured credit card, which is similar to a debit card, bu the history is reported. Department store credit cards can be an excellent source of credit history - but be careful to keep them paid up. You may be able to gain status as an authorized user on someone else's good credit history. If you have had credit issues in the past, consider working with a finance company. To get more ideas and ask questions about these, please contact a Directors loan officer!

How much credit do I need? Avoid opening accounts with high credit limits. Scores are partly based on how much of your available credit you have used. Only apply for the amount of credit you can afford. As long as you have one revolving account that has been active for at least six months, you have a score!

Are there ways to establish non-traditional credit? Acceptable sources of credit include rental and housing payments, public and some private utilities, insurance and other sources like daycare. In some cases, you may have to ask the grantor of the credit for a letter to help establish the history. Although non-traditional forms of credit are not allowed by thecredit bureaus, many lenders will use them as supplementary information in your application.

What if there are errors on my credit report? You should contact the creditor and the credit bureau. Often, a letter on letterhead from the creditor will serve to explain the error and repair your credit report.