Your credit report is one of the first things a lender will look at when deciding whether or not to lend to you. Plus, many lenders have tightened their underwriting standards because of the current economic environment, requiring good or even very good credit to qualify for a loan. A credit score that would have easily qualified for a loan prior to the recession not be good enough today.
Credit scores typically range from about 300 to 850. What each lender considers acceptable may vary, but here's a general guideline:
||750 or higher
||720 - 749
||660 - 719
||620 - 659
||619 or lower
So what can you do to maintain a high credit score or improve a lower score?
Here are some helpful hints
- Contact APL FCU if Your Circumstances Change – If you are experiencing financial difficulty, because of a change in employment status or other reason, notify the credit union immediately. The sooner you let us know what's going on, the better the chance we can assist you.
- Pay Your Bills on Time – This is considered the biggest contributor to a good credit score. Just one late payment could drop your score 50 to 100 points, so paying bills on time is a priority.
- Don’t Carry High Balances – The general rule is to keep your credit card balances to less than 50% of the available credit limit. Maxing out your available credit is a sure fire way to hurt your credit score. But don’t try to fix the problem by opening additional credit lines. Even though it will help your ratio of credit to available credit, too much available credit may be a sign that you are in danger of overextending yourself.
- Maintain a Mix of Credit Account Types – A mix of revolving credit (varied monthly payments like a credit card) and installment credit (fixed payments like a car loan or student loan) can help build good credit history.
- Apply for Credit Only When Necessary – Opening too many credit accounts can hurt your credit, especially if you open them in a short period of time.
Keep a Close Eye on your Credit Report
In addition to taking basic steps to maintain good credit, it’s important to review your credit report on a regular basis. Why? Because recent studies have shown that credit report errors are quite common. Your report may contain such inaccuracies as outdated information, information from other people, or closed accounts that are still being reported as open. Additionally, with fraud and identity theft so prevalent these days, it’s the best way to make sure no one has opened fake accounts in your name.
By law, you are allowed to view a copy of your credit report free of charge, once every 12 months, from each of the three main credit reporting agencies: Experian, Equifax, and TransUnion. We recommend not viewing all three reports at the same time. By alternating companies every few months, you'll have periodic access to your credit report throughout the 12-month period.
To access the free credit reports, visit annualcreditreport.com and follow the instructions. Remember, the basic report is free. You aren’t required to purchase any of the additional offerings, such as your actual credit score or credit analysis services.
If you notice inaccuracies on your credit report, you should take steps to fix the information. The Fair Credit Reporting Act protects consumers by requiring that obsolete information be deleted from credit reports and mistakes be corrected. You can even report these disputes online with the credit reporting agencies listed above. For more information about the Fair Credit Reporting Act and what you should do if you notice incorrect information on your credit report, please visit the Federal Trade Commission’s website.
If you suspect your identity has been stolen based on information you see on your credit report, you should act immediately. Many experts recommend that you contact your local police department and file a police report as soon as possible.
If you see a credit card or credit line on your report that you did not open, you should immediately contact the financial institution or retail store that opened the line to let them know about the fraudulent account.
You may also want to place a “Fraud Alert” on your credit report. This acts as a red flag when businesses access your file to extend you credit. The alert can remain on your file for up to seven years, and your name removed from marketing lists offering prescreened credit offers for five years.
The Bottom Line: Patience
As the old adage goes, it’s much harder to build something up than to tear it down. This is definitely true when it comes to your credit score. Even a couple of late payments can have an adverse affect on your credit rating. And information remains on your credit score for about seven years, so it takes a long time for adverse payment history to work its way off your credit report.
But if you remain patient, stay on top of your payments, work on lowering your debt, and regularly monitor your credit report, you will be able to build and maintain a good or excellent credit score over time.