By Carla Kelley, President, Aspire Credit Union
Your credit score is a three-digit guess about one thing: how likely you are to pay back what you borrow, on time. That’s it. It doesn’t measure how much money you make, how hard you work or what kind of person you are.
But it does follow you. It can change what you pay for a car loan, a mortgage, sometimes your insurance, and whether a landlord says yes. So it’s worth knowing what goes into it.
The most common score, FICO, runs from 300 to 850. It’s built from five pieces.
Payment history — about 35%. Did you pay on time? This is the biggest piece by far. One payment 30 days late can drop a good score noticeably, and it stays on your report for up to seven years. If you do only one thing, pay every bill on time, even if it’s just the minimum.
How much you owe — about 30%. This mostly looks at your credit cards. If your limit is $1,000 and your balance is $900, you’re using 90% of your available credit, and the score treats that as a warning sign. Try to keep balances under 30% of your limits. Under 10% is better.
Length of credit history — about 15%. Older accounts help. That’s why closing your oldest credit card can sometimes lower your score, even if you never use it.
New credit — about 10%. Opening several new accounts in a short time can make lenders nervous. Shopping for one car loan or mortgage within a few weeks is generally treated as a single inquiry, so you can compare offers without much harm.
Credit mix — about 10%. Having different kinds of credit, like a car loan and a credit card, helps a little. It’s not a reason to borrow money you don’t need.
A few myths I hear often:
- Checking your own score doesn’t hurt it.
- You don’t need to carry a balance to build credit. Pay the card off in full and you’ll still build history, without paying interest.
- Your income isn’t part of your score at all.
If your score is low, or if you don’t have one yet, it can be rebuilt. It takes on-time payments and time. There’s no shortcut, and anyone who calls offering one is selling something you don’t want.
At Aspire Credit Union, our goal is to help our members become financially stable and financially savvy. We understand that financial challenges can happen to anyone, and we are committed to being a trusted partner throughout every stage of your financial journey.
Casey Serratos and Tracy Dillard, our Certified Financial Counselors, are available to meet with members and provide personalized guidance and support. Whether you need assistance creating a budget, improving your credit score, reducing high-interest debt, or developing a plan to achieve your financial goals, our team is here to help.
Aspire Credit Union is proud to partner with members working to rebuild their credit, as well as those just beginning to establish a credit history. Through financial education, one-on-one counseling, and products like our Credit Builder Loan, we help members build a strong financial foundation and develop healthy financial habits for the future.
We believe financial success is about more than products and services. It is about relationships, education, and support. No matter where you are on your financial journey, Aspire Credit Union is always willing to sit down with you, listen to your goals, and help you explore solutions that can lead to greater financial success. Your success is our success, and we are committed to helping you get where you want to be.
