The Blueprint to Good Credit Health: Tips, Myths and Real-Life Impact

In today’s modern economy, almost everything you want to do is impacted by credit. Whether you’re looking to take out a car loan, get a mortgage, or go back to school, you’re going to need support from a financial lender. And when you start looking for that extra help, those lenders will be taking a look at what kind of credit you have.

At 1st Colonial Community Bank, we help our customers maintain and improve their credit health to give you access to greater financial opportunities, no matter what your money goals are. If you’re looking to build your credit score in the next few months, we have a few tips to get you started.

Cracking the Code: Your Guide to Understanding Credit Scores

Your credit score is a number between 300 and 850 that suggests to lenders how responsible you are with money that you’re borrowing or have borrowed in the past. The higher your score, the better your credit history.

Typically, credit scores fall into the following ranges:

• 300-579 = Poor Credit
• 580-669 = Fair Credit
• 670-739 = Good Credit
• 740-799 = Very Good Credit
• 800-850 = Excellent Credit

Although each lender will decide what is considered good credit to them, most scores above 670 are generally considered to be good. In Pennsylvania and New Jersey, the average credit score is around 723-725.

Your FICO credit score is calculated based on several different factors, with each holding a different weighting for your score.

• Payment history = 35%
• Credit utilization = 30%
• Length of credit history = 15%
• New credit = 10%
• Types of credit = 10%

If you’re planning to open a new line of credit, it’s always good to look at what your current score is and think about when you might need additional credit lines in the future. Try not to open too many new lines of credit in a small amount of time, as this can significantly impact your score. Although this impact is temporary, spacing out your new credit lines can help your score improve in the meantime and get you a better deal.

The Ripple Effect: Why Your Credit Score Matters in Everyday Life

Maintaining a good credit score is essential because these are determining factors when you borrow money for all kinds of reasons. They’re used by lenders to determine how financially stable you are and whether they want to risk loaning you money. Credit scores can even be used in the hiring process, when you rent a new home, or even with car insurance providers.

When you have a good credit score, you can often benefit from better insurance rates and may be offered additional coverage because you’re seen as a trustworthy borrower. You could qualify for lower credit card interest, while also being approved for higher credit limits which can keep your credit utilization ratio lower.

Studies have found that raising your credit score from fair to very good could save you over $22,000 between interest and other options that become available once you have a higher credit score. This breaks down to nearly $100 a month of savings over the lifetime of your credit and loans.

Strategies for Keeping Your Score in Top Shape

There are several different strategies you can use to improve your credit score. The most important thing is paying your bills on time. This accounts for 35% of your total score and shows lenders that you’re reliable and trustworthy. Consider setting up autopay for your bills so you know that they’re always paid on time.

You should also keep your credit usage as low as possible. Avoid opening unnecessary credit lines and regularly review your spending. If you have large amounts of high interest debt, think about consolidating this to a single, lower interest card to lessen the amount of money you’re paying back over time.

It’s also important to regularly monitor your credit report for fraudulent or incorrect information. If you find any errors on these reports, contact the credit bureaus as soon as possible to have the error corrected. If you become a victim of identity theft, it’s possible that accounts could be opened under your name and cause your credit score to decrease.

You could also consider freezing your credit report through the three credit bureaus if you don’t plan to apply for new credit soon. This stops anyone, including you, from opening a new credit line under your name without unfreezing your credit first.

At 1st Colonial Community Bank, we want to help you improve and maintain your credit score. That’s why we have timely payment reminders as part of our digital banking system so you never miss a payment again. We also have credit monitoring services that help you stay on top of your private information and monitor for identity theft.

In addition, we offer financial education programs, so you can learn how to improve your financial health with our support. If you have a poor credit score currently and are looking to improve it, we can help you open a secured credit card to begin building your credit score back up as soon as possible.

Debunking Credit Myths: What You Really Need to Know

There are plenty of credit myths out there, but what’s true and what’s fiction? One of the most common is that closing your old accounts improves your overall credit score. In fact, the opposite is actually true. Your oldest credit accounts give you a longer credit history, which can make you appear more stable and trustworthy to lenders. Credit history length accounts for 15% of your score, so it’s actually better to keep one or two of those older accounts open. You may consider using the old accounts on occasion to prevent the creditor from closing the account due to inactivity.

It’s also important to know that checking your credit report doesn’t lower your score. When you’re looking at your own report, this is considered to be a “soft inquiry”. You should be checking your score at least 2-3 times a year to monitor for errors or fraud, and to get a better idea of what your current score looks like and where you can make improvements.

You should also be wary of carrying a balance long-term on your credit card. Paying off your card in full each month means you won’t be paying high levels of interest on your balance, and you’ll keep your credit utilization score lower each time you pay off the amount you’ve credited. Having a low or no balance on your card also shows future lenders that you can use a credit line responsibly.

Securing Your Financial Future with Good Credit Health

Having good credit is essential for taking out future loans or opening new credit cards. The higher your score, the more potential you’ll have to benefit from lower insurance rates, lower interest rates, and higher credit limits on your loans and cards.

By taking proactive steps to monitor and boost your credit score, you can see significant improvements over just a few months. At 1st Colonial Community Bank, we’re here to support you no matter what your financial goals are. If you’re looking for new ideas to improve your credit score, stop in at one of our branch locations or contact us to talk to a lending expert today.