Simple steps to understand, improve and protect your credit
Your credit score is more than just a number. It is a key that can unlock financial opportunities or stand in your way. Whether you are applying for a mortgage, financing a car or renting an apartment, your score plays a major role in the terms you are offered.
Most scores range from 300 to 850. A score above 740 is considered excellent and can qualify you for lower interest rates and better loan options. In today’s economic climate, maintaining a strong score is more important than ever.
How your score is calculated
Credit scores are based on your credit report, which tracks your borrowing and repayment history. The most widely used model, FICO, weighs five key factors:
- Payment history (35%): Late payments can drop your score significantly and stay on your report for years.
- Amounts owed (30%): This refers to your credit utilization, or how much of your available credit you are using. Keeping it under 30 percent is ideal.
- Length of credit history (15%): Older accounts help your score, so think twice before closing them.
- New credit (10%): Each application can cause a small dip in your score due to hard inquiries.
- Credit mix (10%): A variety of credit types, like credit cards and loans, shows you can manage different financial responsibilities.
Steps to improve your score
Improving your score takes time, but small actions add up. Start by checking your credit reports for errors. You can often access them weekly for free.
Pay bills on time. Setting up autopay can help. If your credit utilization is high, work on paying down balances or request a credit limit increase without increasing spending. If you are rebuilding, consider secured credit cards or credit-builder loans that report positive payment activity.
Avoid these common pitfalls
Maxing out your cards, even if you pay them off monthly, can hurt your score. Limit new credit applications and avoid closing old accounts unless necessary. These actions can shorten your credit history and raise your utilization rate.
By understanding how your score works and making smart choices, you can build a stronger financial foundation. That opens the door to better opportunities in 2025 and beyond.
Stop by your local Alpine Bank branch today to learn more about how we can support your financial journey.
