Understand Your Credit—and Take Control of Your Financial Future

Your credit score is a key number that lenders use to determine your creditworthiness—how likely you are to repay loans on time. Whether you’re applying for a mortgage, car loan, or credit card, your score can impact approval, loan amount, and the rate you pay.

The most widely used credit score is the FICO® score, which is used by about 90% of lenders. FICO scores range from 300 to 850, and they’re based on the information in your credit report from one of the three major credit bureaus: Equifax, Experian, and TransUnion.

Credit Score Ranges & What They Mean

• <580: High risk borrower

• 580–669: Below average, still eligible with many lenders

• 670–739: Near average, considered a reliable borrower

• 740–799: Above average, strong history of credit responsibility

• 800+: Excellent credit, lowest risk to lenders

Why Credit Scores Matter

• Determine loan approval and interest rates

• Affect credit card limits and insurance premiums

• Impact housing applications and even job offers in some industries

Even small improvements in your score can save you thousands of dollars over time.

What Affects Your Credit Score?

FICO Scores are based on five key factors:

• Payment history: on-time payments (35% of score);

• Credit utilization: how much you owe vs. limits (30%);

• Length of credit history (15%);

• Credit mix: types of accounts: credit cards, car loan, home loan (10%);

• New credit: recent applications or inquiries (10%).

Factors That Do Not Impact Your Credit Score

When it comes to improving your credit score, it’s just as important to know what doesn’t affect it as what does. Many people waste time worrying about factors that have no direct impact on their score. Let’s clear up some common misconceptions.

1. Checking Your Own Credit Score

Checking your credit score through your bank, a free credit monitoring service, or directly from a credit bureau is considered a soft inquiry (also called a soft pull). Soft inquiries do not affect your credit score in any way. You can check your score as often as you’d like without causing a drop.

This is different from a hard inquiry, which happens when you apply for a loan or credit card. Hard inquiries can temporarily lower your score.

2. Rent and Utility Payments

In most cases, your rent payments and utility bills aren’t reported to the major credit bureaus and won’t help your credit score.

• Exceptions: If you use a rent-reporting service or a program like Experian Boost, these payments can be added to your credit file and may improve your score.

• Caution: If you fall behind and your account is sent to collections, it will be reported to the credit bureaus and will negatively affect your score.

3. Your Income and Bank Account Balances

Your credit report only includes information about credit accounts such as loans, credit cards, and payment history. Your income, savings, checking account balance, and investments are not included and do not directly influence your credit score.

4. Your Age

Credit scoring models do not factor in your age. However, older individuals often have longer credit histories, which can indirectly benefit their score.

How to Build and Maintain a Strong Credit Score

• Make on-time payments every month

• Keep credit card balances low

• Don’t open unnecessary accounts

• Check your credit reports annually at AnnualCreditReport.com

Take the Next Step Toward Better Credit

·      Your credit score is a tool for building your financial future.

·      Whether you’re just starting out or need to rebuild, money coaching can help.

Book your FREE 30-minute consultation with Golden Eagle Financial Coaching to discuss a personalized action plan to:

• Understand your credit report;

• Improve your credit factors; and

• Increase your chance of approvals and lower rates.

Let’s take the guesswork out of your credit and put you back in control.