Improve Your Credit Score

You may already know credit score basics, and how your score is used to help determine if you can get approved for a loan and which interest rates you qualify for. However, do you know it also affects your ability to get housing, insurance, and even your credibility with employers?

Your credit score affects many aspects of your life, so its important to have a clear understanding of how it works. Learning the five main components of your score is a good first step.

•Payment history is based on your bill payment history over time. This includes but is not limited to credit card, mortgage, and utility payments. Keep your credit score in good standing by making consistent, on-time payments.

•Amount owed is determined by the amount of debt you owe versus the total amount of credit you have. The reality is, if you use more than 50 percent of your credit limit, you will likely see your score drop.

•Length of credit history demonstrates your financial stability and the ability to manage credit responsibly. Keeping credit accounts open for at least two years will positively affect your score. Length of credit history can also play a role if you are trying to reduce your number of accounts.

•New credit looks at the number of accounts youve opened recently, as well as your proportion of new accounts to older, established accounts. Also considered are the number of recent credit inquiries that have been made for your report.

•Types of credit examines your current mix of debts, which may include credit cards, mortgage and auto loans, and retail accounts. Its important to have a good blend of credit, with limited revolving credit card accounts, because it shows youre able to manage a variety of credit types, says Elling.

Visit your local Affinity Plus branch location for a free copy of your credit report. A financial professional will meet with you, one-on-one, to review your report and answer your questions. We want to help you understand your credit report and how you can improve, and maintain, your score, says Elling.

For more information about credit score factors, free workshops, or to make an appointment with an Affinity Plus Federal Credit Union financial professional, please call (888) 830-2280 or visit www.onthemoneymn.com.

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