and how to improve yours

Your credit history and credit score are important — especially if you plan to buy a house,

a new car or another big purchase that requires some type of loan.

But according to a recent survey, nearly two-thirds of Americans have not checked their

credit score in the past year. That’s a big, big problem! Why? Staying in-the-know about

your credit score can ultimately save you a lot of money. You’ll receive access to better

credit cards, qualify for lower interest rates, improve your insurance coverages and

increase your amount of options for big-ticket items. Sounds pretty good, right?

Below, we’ve outlined the fundamental details about what your credit score is and what

factors influence it.

WHAT IS A CREDIT SCORE?

A credit score is a rating of your credit history, usually on a scale of 300 to 850, that

lenders use to decide whether or not they will lend you money (and at what rate). People

with higher credit scores are considered lower risk, and therefore more likely to get better

loan terms and interest rates than people with low scores.

HOW TO TRACK YOUR CREDIT SCORE FOR FREE

At Security National Bank, you have instant access to view your live credit score,

whenever you log into the SNB Mobile App. This is a free service, to help you understand

your current credit score, provide credit monitoring alerts, and simulate and learn ways

you can improve your score.

HERE’S WHY YOU NEED A GOOD CREDIT SCORE:

If your credit score is low, you have less of a chance of getting approved for a mortgage,

auto loan or other type of loan. On the other hand, people with higher credit scores are

considered lower risk — and therefore more likely to get better loan terms and interest

rates than people with low scores.

WHAT IS CONSIDERED A GOOD CREDIT SCORE?

On a scale of 300 to 850, a good credit score is generally considered to be above 720.

However, opinions will vary depending on the bank offering the loan. According to the

ABA, the national average FICO® score is approximately 699.

FACTORS THAT AFFECT YOUR CREDIT SCORE

Generally, about 35 percent of your score is based on your payment history; 30 percent

is based on the amount you currently owe (your debt-to-credit ratio), 15 percent is

based on how long you have had credit; 10 percent is based on the number of inquiries

into your credit report; and 10 percent is based on the types of credit you have.

In addition to these factors, some lenders might also have their own scoring methods,

like total annual income or the amount of time you have stayed at the same job.

HOW TO IMPROVE YOUR CREDIT SCORE

There is no overnight fix for a low credit score, but there are steps you can take to

improve it over time:

1. Check your credit report for free.

According to federal law, each year you are entitled to receive one free copy of your

credit TransUnion). Request your free report using the Federal Trade Commission’s website

at www.annualcreditreport.com. Check your credit report annually to ensure no new cards

or accounts have been opened by criminals in your name, and make sure everything else

looks accurate so you can get the best terms when you apply for a loan.

2. Pay your bills on time.

Payment history makes up the largest portion of your credit score (32-35 percent), so the

more you pay your bills on time, the better your score. One way to avoid missed payments is

to set up “automatic bill pay” on your bank account. At Security National Bank, you can set

up auto bill pay through online banking or by using the SNB Mobile App.

3. Never max out your card.

Just because you have a huge “credit limit” on your account, doesn’t mean you should use

it — or ever get close. Racking up big balances can hurt your credit score, even if you pay

your bills in full, so try not to use more than about 30 percent of your available credit on any

credit card.

4. Educate yourself with free resources.

You can learn much more by taking our interactive crash course on Credit Scores & Reports.

This is part of our free Financial Learning Center where you can explore video content, test

your financial knowledge, and connect directly with SNB team members who can guide you

toward better financial health.

ABOUT THE AUTHOR

Laura Pratt is the Senior Retail Banking Officer at Security National Bank’s downtown location. She has more than three decades of banking and lending experience, including 25 years serving customers at SNB.

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