STRAIGHT TALK #2:
Your Credit Score

A credit score is a number used by lenders to evaluate the possible risk of lending money to consumers. Credit scores typically run from 300 to 850 and are based primarily on information compiled by the three leading credit reporting agencies, Experian, TransUnion and Equifax.

The score helps determine who qualifies for a loan, at what interest rate, and what credit limits. The higher the score, the better the terms.  While there are many types of credit scores available, most lenders rely on the FICO^® score developed by Fair Isaac Corporation.

Your Payment history is roughly 35% of the score. Late payments and missed payments can really hurt your score. Accurate negative information can remain in your credit report for seven years, and bankruptcy information for ten years. So, any mistakes you make now will impact your credit score for years.

How much you owe accounts for around one third of your score. What you owe on credit cards versus your credit limit is important. Your balance should never be more than 30% of your total available credit.

The length of credit history is roughly 15% of a Credit Score. Since a long, healthy credit history is preferred, longstanding accounts are important to maintain.

New credit opened and the search for new credit is roughly 10% of a Credit Score. Too many inquiries by potential lenders affects your score. One inquiry will generally knock no more than 5 points off your score. The credit score treats multiple inquiries in a 45-day period as just one inquiry. So, if you plan to shop for a loan, make all your inquiries within a 45-day window.

       The other 10% of the Credit Score looks at other factors in your history.

Together, we can improve our local economy and our community, one loan at a time

                        Ron Farina, C.E.O. and President

                      New Buffalo Savings Bank