Celebrating National Credit Education Month

March is National Credit Education Month which focuses on educating individuals about the significance of building and maintaining good credit. This month presents an excellent opportunity to enhance your understanding of credit and take meaningful steps toward achieving financial empowerment.

What is a credit score?

A credit score is a three-digit number calculated to indicate your creditworthiness. The higher the score, the more creditworthy you are to a lender. A credit score is calculated from the information in your credit report and takes into account whether you have been making on-time payments, your revolving debt use, the length of your payment history, and other such factors. It is important to note that your score does not take your age, income, employment, marital status, or bank account balances into account.

How are credit scores used?

Any institution that lends money – such as banks, credit card companies, financing companies and mortgage lenders – can use a credit score to help them assess whether you meet their lending criteria. These institutions are likely to use your credit score along with other information unrelated to the credit score that they have obtained directly from you, such as whether you’re working, your work history, your income and your planned down payment. In general, borrowers with higher scores can get more credit, and at more competitive rates.

Lenders aren’t the only ones who may use your credit score. Insurance carriers can use credit scores to help predict losses and to accurately price homeowners and automobile insurance policies.

Tips for maintaining good credit

"There are several ways to maintain good credit," says Mary Jo Snyder, AVP Mortgage Lending Manager.

Here are some tips she shared to improve or maintain good credit health:

• Pay your bills on time.
  • Ensure you pay at least the minimum amount due and make your payments on time, if not early. A single late payment can affect your credit score.
• Apply for credit only when you need it.
  • Do not open too many accounts too frequently. And avoid opening multiple accounts within a short time span. Too many inquires can negatively impact your score.
• Reduce your total debt.
  • It's not bad to owe some money; but it is not good to owe too much money. Consider paying down some of your outstanding loans. A useful guideline to follow? Aim to utilize about one third of your available credit.
• Review your credit history to ensure there are no errors.
  • Check for any inaccuracies in your personal details, account status (open or closed), account balances, account age or payment history. Once a year, you can request a copy of your credit report from the three major credit bureaus - Experian, TransUnion and Equifax - at www.annualcreditreport.com. Or you can see your score whenever you want with CreditSense - a free comprehensive credit score program for Norry Bank customers.

Learn more about credit scores and scoring models from the Consumer Financial Protection Bureau.

If you're looking for a loan or credit card, Norry Bank is here to help. To learn more, call us at 888-877-6623.