National Credit Education Month
March is National Credit Education Month. Your credit score is what financial institutions and other companies use to assess your ability to repay money that you borrow. What does it mean to be creditworthy? While your credit score may seem like just a number, it provides a snapshot of how “creditworthy” you are, which can have a significant impact on your life and financial goals. Achieving financial goals such as buying a home, leasing a car or paying off debt are directly related to your credit score and require some credit history. A good credit score is also needed to qualify for the lowest-possible interest rates when taking out loans.
According to Experian, there are several factors that can affect your credit score. Some of the most important factors are as follows:
- Payment history – This is the most important factor in credit scoring, as it only takes one missed payment to negatively impact your score.
- Amounts owed – Your credit usage, as represented by your credit utilization ratio, is the next most important factor to consider in credit scoring. Using more than 30% of your available credit is negative to creditors.
- Credit history length – How long have you held credit accounts? Typically, the longer your credit history, the higher your scores.
- Credit mix – It is recommended to hold a good mix of credit accounts for a top credit score. These might include a car loan, credit card, student loan or mortgage.
- New credit – The number of credit accounts you’ve recently opened as well as the number of hard inquiries on your credit accounts for a percentage of your score. Too many accounts or inquiries can indicate risk, thus hurt your score.
To educate our community and customers on how credit scores and reports work, Allegiance Bank has partnered with EVERFI to provide you with short, five-minute lessons that include information about:
- The types of financial institutions and other companies that may use your credit score
- The importance of credit, how to monitor credit, and how to improve and maintain credit
With a few tips, we can help you develop healthier credit habits. Our EVERFI financial center provides access to modules that our community can complete in less than 10 minutes.
Learn more about Credit Scores and Reports through the modules found in the Allegiance Bank financial education center.