Consumers Still Confused about their Credit Scores
The vast majority of Americans (90%) recognize the importance of having access to credit. But a significant percentage (52%) of adults do not understand the most influential factors that go into a credit score, and almost 40% do not know their personal credit score.
According to the new Chase Slate Credit Survey, people who consistently check their score have a better perspective of a “good” credit score. Those who had previously checked their scores said 719 was “good” on average, while those who never check their score said it was 668.
Of those surveyed, only 37% said their current scores will help them achieve their personal goals. Two out of three respondents would like to be able to improve their credit score during the next year, but only 35% have a plan they feel will allow them to do so. In fact, 22% admit they have never taken any steps to improve their score.
Quick Facts about Credit Scores
- Each lender and credit bureau has its own definition of a “good” credit score
- Scores 750+ are considered “excellent”
- Scores between 700 and 749 are considered “good”
- Scores between 640 and 699 are considered “average”
- Anything below 639 is considered poor or bad
Factors that Influence Credit Scores
- On-time bill payments
- Debt utilization (the proportion of your current debt to your available credit limits–keep it below 30%)
- Credit inquiries
- Long-term credit history
- Account buildup (slowly acquire accounts rather than opening multiple accounts at one time)
- Credit portfolio (the variety of credit accounts you have in good standing)
How to Stay Informed about Your Credit Score
You are able to see a free copy of your credit report every year from each of the major credit bureaus. Or can request these through AnnualCreditReport.com. You may also contact Experian, Equifax and TransUnion individually to request a free report. Note that you will not see your credit score on your report, just the history of your credit. If you want to see the score, you can pay a separate fee to do so.
Many credit card companies, like Discover and Barclaycard, and some cards like the Chase Slate, have started providing free FICO credit scores with their monthly statements. This will not tell you how your credit looks with each bureau individually, but it will allow you to gauge your credit health for free if you have one of these cards. You may also sign up for online credit monitoring services to keep track of inquiries on your credit score.
How to Boost Your Credit Score
If your credit score is low or non-existent, focus on paying all of your bills on time each month. This is the easiest way to boost your score or keep it high.
Avoid opening multiple accounts at the same time as this will hurt your score. Having your credit pulled multiple times over the course of several weeks will also do damage to your score. If you are applying for a loan, a credit card, or a line of credit, get all of your applications completed within a 14-day period so you only have one hit on your credit.
Do not close accounts that have zero balances. Instead, keep those accounts on your credit to show a long history. This will boost your score, and the added credit limit will also help lower your debt utilization.
Monitor your credit diligently and report any false marks on your credit as soon as you notice them. Being proactive will keep your score high and ensure that you can achieve your personal goals.
One new tool on the market may provide some help in this area. Add your positive utility payment history to instantly increase your FICO® score. Experian Boost™ helps by giving you extra credit for the utility and mobile phone bills you’re already paying. (Results may vary; see website for details.)