Understand What Impacts Your Credit

so that we can help make handling your personal finances a whole lot easier.

Understand What Impacts Your Credit

Chapter 1: Impacts to Your Credit: Payments, Balances, and Credit History

In order to get better control of your credit, you need a good grasp on what credit is and how it works. This part of the conversation defines credit and outlines the key components of a credit score.

Change starts with knowledge, and that’s what this chapter is all about. Watch the video and download the Credit Myths: Discredited Guide as a guide and a place to make notes for what credit facts resonate with you.

Video Transcript

The DNA of a credit score. 

Let’s imagine you’re getting ready to buy a car. You’ve saved a good portion of the money to pay for it, but you’ll still need a loan to help purchase it from the dealer. Before any lender decides to give you a loan for the car, they will check your credit score. 

Your credit score is made up of five key components: payment history (35%), credit utilization ratio (30%), length of credit history (15%), credit inquiries (10%), and credit mix (10%). 

This data feeds into a credit report. The report basically indicates the level of responsibility with which you pay your bills and loans. If you have a history of consistently missing payments and you max out your credit cards, you should anticipate a low credit score. On the other hand, if you make your payments on time and you stay under 30 percent of your credit limits, you’ll have a higher credit score. 

A higher credit score is great, but if you have a lower score, it’s not the end of the world. You could make adjustments to improve your credit relatively quickly. 

Budgeting Tip: Credit scores range from 300-800. Higher credit scores are favorable to lenders. 

Your Chapter 1 Checklist:

Chapter 2: Impacts to Your Credit Inquiries Cash and Income Next Step

Get the Real Scoop on Credit
Our panel of experts will talk through 10 popular credit myths and show you the truth.