Grow Financial Federal Credit Union

Credit Education

Being Smart About Credit Can
Make All The Difference


Having financial freedom starts by understanding how credit works and being as creditworthy as possible. That means having a credit score of at least 700 or higher on a scale from 300 to 850. Every credit score is determined by five factors: payment history, how much you owe, how long you’ve had credit accounts, secured credit (like a mortgage) versus unsecured credit (like a credit card), and the number of recently opened accounts.

The good news is that even if you don’t have a great credit score, you can fix it. First, pay your bills on time. Then, pay down your debt. Third, don’t open new cards, but do keep your paid off cards open. Finally, give it time. Your score won’t improve overnight, but by doing all the right things consistently, you can be sure it will go up over time.

How Your Credit Score Adds Up

You hear a lot about credit scores, but how does your number add up? Basically, it’s determined by five key factors.

Payment History

The biggest factor in your score. Why? It means you take financial commitments seriously and pay your bills on time. Lenders like to see that.

Outstanding Debt

Everything you owe… home, auto and student loans, and credit cards. It’s the second biggest factor because lenders won’t lend if they think you’re in over your head.

Length of History

Still have the very first credit card you’ve ever opened? Good! Having established credit accounts in good standing, and not opening lots of new ones, shows you’re responsible with credit.

Type of Credit

Again, a small factor but important, because it looks at the type of debt you have, good or bad. Good is debt that’s secured by an asset, say, a car loan or a mortgage. Bad is unsecured debt, such as credit cards and student loans.

Credit Applications

Have you opened any new accounts in the last year? While this is only 10% of your score, you can seriously hurt yourself here by suddenly applying for lots of new credit cards. That’s a sign you may be on thin ice, financially.

How To Fix Your Credit Score

Credit scores are measured on a scale of 300 to 850, and where you want to be is 700 or higher. Not there yet? Don’t worry. Your score isn’t set in stone, and here’s how you can improve it.

Don’t Miss a Payment. Automated bill pay services, such as Grow Online Bill Pay, can ensure that your payments are made on time, all the time.

Reduce Your Debt. Got a maxed out card? Un-max it. Make an effort to pay down/pay off unsecured debt, like credit cards and student loans.

Don’t Open New Cards. And don’t close out old cards for two reasons. First, it reduces the amount of available credit you can draw on. Second, you lose that long history of credit management when you close an old card.

Give It Time. Your score won’t improve overnight, but it will improve. Just making payments on time for six months can notch your score up a bit. And past mistakes, like late payments, do eventually fade away.