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Understanding Credit Scores

your guide to great credit

Navigating your credit score

Your financial wellness is important to us, and understanding your credit score helps you improve it.

What is a credit score?

Your credit score is a three digit number, typically ranging from 300 to 850, that relates to your likelihood of repaying debt. Traditionally used by lenders when you apply for a loan, your credit score may now also become a factor when applying for jobs, insurance, and rental properties.


What makes the credit score?

35% = Payment History
On-time payments, with more weight given to recent payments, are the biggest factor in your credit score.

30% = Capacity (Amounts Owed)
How high are balances on revolving accounts in comparison to limits? It is better to owe little or nothing on multiple credit cards or lines of credit than to use most of your available balance on a single account.

 15% = Length of Credit History
What is the average age of your open credit accounts?

 10% = New Credit
Accumulation of new credit accounts in last 12-18 months and the number of inquiries can lower your score.

 10% = Types of Credit Used
Installment loans (auto, mortgage) can increase your score; Revolving loans (credit cards, lines of credit) can increase or lower your score depending on how they are used; Loans from finance companies can decrease your score.


Approximate credit weight for each year

Activity on your credit report affects your score with varying degree depending on when it occurred.

40% = Current to 12 months

30% = 13-24 months

20% = 25-36 months

10% = 37+ months



730-830 = A+

680-729 = A

640-679 = B

600-639 = C

550-599 = D

549-below = E

*ranges may vary by institution and are not set by the three credit bureaus or FICO.

What improves your credit score?

  • Pay off or down revolving accounts like credit cards
  • Make sure your capacity stays good when closing credit cards
  • Move revolving debt to installment debt, but keep revolving open
  • Continue to make payments on time (older late payments lose significance over time)
  • Slow down on opening new credit accounts; 1-2 per year is a good guide
  • Acquire a solid credit history with years of experience

What hurts your credit score?

  • Missing and delinquent payments (it can take 24 months to restore credit from a missed payment)
  • Maxing out credit cards
  • Shopping for credit excessively
  • Opening numerous trades in a short time
  • Having high amounts of revolving debt in relation to your revolving limits
  • Reducing overall limits by closing revolving accounts, like credit cards
  • Borrowing from finance companies

How to build credit

  • Review your credit report annually at Check for inaccuracies and correct them
  • Work with Trailhead to review credit building tools and opportunities
  • Ask a family member you trust — one you know has good credit and makes payments on time — if you can be added to their credit card account as an authorized user
  • Apply for a Savings Secured Loan or a Secured Credit Card. The amount of the loan is held by the savings account until the loan is paid in full, meanwhile payments are reported to the credit reporting bureaus, helping you build a positive credit history

We can help

To learn more about your credit score and ways to improve it, please contact a Member Service Officer.

Email info@trailheadcu.orgCall 503.220.2592