Tag Archives: credit score

Why Checking Your Credit Score Matters

Credit Score

Across television ads, online banners, and even chit-chat among relatives, the phrase, “Check your credit score,” seems to be popping up everywhere. If something so important needs constant reminders, why does it have such a key importance in your personal finances? Well, the truth is that it doesn’t, your financial actions do.

A credit score is comprised of five different measures which indicate how you as an individual are perceived in terms of repayment and risk. Individuals who pay their bills on time, have been utilizing loans and credit cards, and don’t maintain too much debt, typically have a higher score. While the score itself is seen by potential lenders as a positive or a negative, the true meaning it portrays is to showcase whether you as an individual are a promising person to repay any funds you are lent. This score can be changed for the better or the worse depending on the actions you take.

This is why checking the report itself can be beneficial for your personal financial reputation. By reviewing your history on a recurring basis you can quickly identify any mistakes or missed payments that need correcting and do so in a timely manner.

For those who do not check their score, scenarios such as the following could occur:

Say you accept a job in another town, and after moving, you realize you still need to forward your mail. After a week or two in the new place, you go online and make the switch. However, unknownst to you, there was one last utility bill that was mailed to your prior address after you moved away. Weeks go by, even months, only now you’re connected with a new utility company, and you have new bills to pay. Behind the scenes, however, your credit score could be declining, because that one last bill has now been reported to collections. Your credit history will now note that a payment has been missed, and the longer it is missed the more it could damage your credit score.

Situations like this happen to many Americans, and while sometimes they can’t be prevented, the damage they cause can be minimized by checking your credit score on a monthly basis. Instead of allowing a payment like this to retain a balance for over 120 days, you can catch it in under 90 and minimize any potential negative effect on your score.

This is just one example of how checking your credit score can impact your financial health for the better. Other benefits include fraud prevention, better financial negotiation, and more accurate personal financial records.

If you’re ready to get started checking your credit score, we recommend Capital One’s FREE Credit Wise service, available for current and noncurrent Capital One customers. Our team at First Security State Bank would be happy to walk you through the information from this service and we are always available to answer any questions you may have.

 

Red Flags to Look for on Your Credit Score

Personal Finance

Everyone and their brother seems to be sharing the importance of checking your credit score, but once you have the information, how do you actually know what it means? At First Security State Bank, we want you to not only have the information about your personal finances but be able to understand and act upon it as well. If you see any of the following red flags while viewing your report, you may want to look into the appropriate remedies as quickly as possible.

Missed or Late Payments

Your credit report should accurately showcase your current repayment history, which accounts for approximately 35 percent of your credit score. This area of the report should indicate if any payments have been missed and have been reported to the bureau as late. If you see a payment that you were unaware of, be sure to reach out to the company listed and contact them to pay off the bill in question.

Fraudulent Activity

It is possible to view your credit report and find bills or inquiries that you did not initiate. In this instance, it is important to take the appropriate steps to report identity theft and begin recovering your financial reputation. The sooner you alert the authorities and lending organizations to this unfortunate dilemma, the less likely you are to suffer any long-term side effects.

Excessive New Accounts

While having more than one account open can positively affect your credit score, attempting to open too many in a short time period can cause a negative reaction. If you see more than two accounts opened in the last three months, you may want to wait before attempting to apply for a credit card or other lending option.

Active Collections Accounts

If you haven’t checked your credit score in a few years, any potential missed or late payments may now have spiraled into active collection attempts. In this instance, the best practice is to contact the companies listed and discuss repayment options. Many times if you are actively working to pay down an account receivable, the company will work with you to structure monthly installments that fit within your personal budget.

At First Security State Bank, we recommend checking your credit score each month. Tools such as Capital One’s CreditWise make it affordable to see your score without having to pay any associated fees. If you’d like more information on how to increase your credit score, stop in today. One of our trusted personal bankers would be happy to answer any questions or curiosities that you have.

Things People with Good Credit DON’T Do

We hear a lot of advice about improving a credit score. It's time to take a look at what you should not be doing.

We hear a lot of advice about what you should do to improve your credit score. It’s time to take a look at what you should not be doing.

Your credit score is not a new topic for First Security State Bank. While we usually emphasize tricks you can use to raise your credit score, the importance of maintaining that score is often overlooked. Instead of listing a bunch of things you can do to raise your score, we are going to look at a few things that people with good credit DON’T do.

People with Good Credit Don’t:

1. Wait Until the Due Date to Pay Bills

Paying bills on time is not a new or novel idea. But just paying off bills by the due date will not guarantee good credit. If possible, pay off your cards by the report date. This is the date, typically a few days before the due date, is when a creditor sends updates to credit bureaus. If you haven’t paid your bill by the day, it could appear that you are carrying a balance from month to month. But when you pay by the report date, the creditor reports a zero dollar balance. And the less debt you have, the higher your score will be.

2. Open Retail Store Accounts

The credit inquiries that each retailer asks for impacts your credit score. Each one can reduce your credit score by up to five points. This may seem minor, but if you apply for multiple cards in a short period of time, those points add up. Is lower credit worth a one-time discount?

3. Stop Using Credit Cards

When you can’t control spending, it may seem like a good idea to cut up the credit cards. But people with good credit never stop using their cards, even if it means spending just $20 a month. Some credit card companies will cancel accounts after a certain time of inactivity. This can drive up overall credit utilization ratio, causing a drop in credit score. It can also shorten your credit history, which triggers a drop as well.

It is an achievement to raise your credit score, but it is even more important that you maintain it. This will make it easier to qualify for loans and earn lower interest rates. For more advice on getting your credit score up, contact First Security State Bank.