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Building Credit

Why is a credit score important?

Every time you complete an application for credit (mortgage, credit card, car loan, etc.), the lender must decide if they will grant you the loan. Your credit score (range of 300-850) plays a big role in their decision-making process because it shows how responsible you've handled credit in the past and what the risk might be to the lender, for that loan to be repaid. The higher your credit score, the more likely you are to be approved for loans and will receive lower interest rates when borrowing.

This method of determining how responsible you've been with past credit is also being used for decisions on renting of apartments, approval for cell phone plans and is a large factor in what price you'll pay for auto insurance. (Why does it matter? Testing showed people with good credit scores are more cautious drivers and have fewer accidents. Keep this in mind each time your auto insurance policy is renewing and ask for better pricing if you've improved your credit recently.)

What makes up your credit score?

You actually have three credit scores, one for each of the credit bureaus - Experian, TransUnion, and Equifax (scores will be similar, but vary slightly by bureau). Each credit bureau maintains a file about your credit history. (You can request one free report from each of the credit bureaus once per year at Over time, the information in your credit history changes & your credit score changes based on how you handle re-payment of debt owed.

  • 35% - Payment History - Shows whether you've paid your credit accounts on time.
  • 30% - Amount Owed - Looks at how much of your available credit limit is being used and compares to the original loan amount.
  • 15% - Length of Credit History - How long your credit accounts have been established.
  • 10% - Types of Credit In Use - Looks at the mix of credit cards, retail accounts, installment loans and mortgages.
  • 10% - New Credit - Opening multiple new accounts in a short time represents a greater risk for future lenders and lowers the average age of your credit history.

Your credit score will largely determine:

  • if, and how much money a lender is willing to loan you
  • what rate of interest you will pay on a loan
  • the length of time the lender is willing to lend you the money

No Credit isn't bad credit

Many car and credit card advertisements imply that no credit is a bad thing. In reality, it just means you haven't had a chance to prove yourself. There is no need to pay monthly fees to have a starter credit card or fall prey to outrageously high interest rates on your first car loan through the dealer. We have options that won't penalize you for a lack of credit score. Leave a message for our loan officers and ask how we can help you build a credit score safely.

Fixing Credit

Steps to repairing your credit score are pretty straightforward.
  1. Know exactly where you stand. Gather all information on income and all your monthly bills and total each group.
  2. Get debt payments made on time. If your bills are more than your income, you'll need a spending plan (we provide credit and debt counselors to build your spending plan) that allows you enough money to make those payments.
  3. Use your spending plan to control existing debt and don't add new debt.

Each month your lenders report the progress you've made. Months of on-time payments, lowering how much you owe and establishing a positive credit history will boost your credit score. If you want assistance with your credit report, we offer GreenPath Financial Wellness, ACMG's financial education and counseling partner. GreenPath will provide you a copy of your credit report for a nominal fee. And once you receive the credit report, a GreenPath counselor is available to review the report with you. They will help you understand how to read the report, show you how to dispute inaccurate information, and discuss credit scoring. GreenPath counselors are available Monday through Thursday 8 a.m. to 10 p.m. (EST), Friday 8 a.m. to 7 p.m. and Saturday from 9 a.m. to 6 p.m. To use this new service, simply call 1-877-337-3399 or visit them on the web.

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