Understanding Credit Scores and How to Improve Them

At First State Bank of the Southeast, we understand that your credit score is an important factor in your financial health. That is why we wanted to provide you with a guide to understanding your credit score and how to improve it.

A credit score is a number that represents your creditworthiness based on your credit history. Lenders, including banks and credit card companies, use this score to evaluate the risk of lending to you. A higher credit score means you are more likely to be approved for loans and credit cards, with better terms and lower interest rates.

So, what affects your credit score?

  1. Payment history: Late or missed payments can have a significant impact on your score.
  2. Credit utilization: The amount of credit you are using compared to your credit limit can affect your score, especially if you are using a high portion of your available credit.
  3. Length of credit history: The longer your credit history, the better, as it shows your ability to manage credit over time.
  4. Types of credit: A mix of diverse types of credit, such as credit cards, mortgages, and auto loans, can improve your score.

If you are looking to improve your credit score, here are some tips from your First State Bank bankers:

  1. Make payments on time: Late or missed payments can stay on your credit report for seven years, so make sure to pay your bills on time.
  2. Keep credit utilization low: Try to keep your credit utilization below 30% of your available credit.
  3. Do not close old credit accounts: The length of your credit history is important, so do not close older accounts, even if you are not using them.
  4. Check your credit report regularly: Regularly check your credit report for errors and dispute any inaccuracies with the credit bureau.
  5. Limit new credit applications: Every time you apply for credit, it can have a negative impact on your score, so limit new credit applications to when you really need it.

At First State Bank, we want to help you achieve and maintain good financial health. By following these tips and understanding your credit score, you can increase your chances of being approved for loans and credit cards at favorable terms. If you have any questions or concerns, please contact us. We are here to help!