Understanding Your FICO Score: The Key to Better Financial Health
Understanding Your FICO Score: The Key to Better Financial Health
When it comes to your financial future, few numbers matter more than your FICO score. Whether you’re applying for a loan, getting a credit card, or even renting an apartment, your credit score tells lenders and businesses how well you manage your money.
At Jordan Credit Union, we believe that knowing how your FICO score works is one of the most powerful steps you can take toward building a strong financial foundation.
Here’s what you need to know!
💳 What Is a FICO Score?
Your FICO score is a three-digit number that summarizes your credit behavior. It’s based on the information in your credit reports and helps lenders decide:
- If they should lend you money
- How much to lend
- What interest rates to offer
FICO scores typically range from 300 to 850, with higher scores showing that you’re a responsible borrower.
What Factors Affect Your Credit Score?
Several key factors go into calculating your FICO score:
- 🕒 Payment History (The Biggest Factor!)
Importance: About 35% of your score
Why it matters: Lenders want to know if you pay your bills on time.
Pro Tip: Always pay at least the minimum amount due—on time, every time.
Reminder: Missed payments can stay on your credit report for up to 7 years! - 💳 Credit Utilization (How Much You Owe)
Importance:About 30% of your score
Why it matters: Using too much of your available credit can signal financial stress.
Pro Tip: Keep your credit card balances low—ideally using less than 30% of your available limit. - 📅 Length of Credit History
Importance: About 15% of your score
Why it matters: A longer credit history gives lenders more information to assess your behavior.
Pro Tip: Keep older accounts open if possible, even if you don’t use them often.
Other smaller factors include:
- New credit inquiries (how often you apply for new credit)
- Credit mix (having a variety of accounts like loans, credit cards, etc.)
How to Boost Your Credit Score
Building and maintaining a strong credit score doesn’t have to be complicated. Here are a few simple tips:
- Always pay your bills on time.
- Keep your credit card balances low.
- Limit how often you apply for new credit.
- Keep older accounts open and active.
- Regularly check your credit reports for errors.
- Small steps taken consistently can lead to big improvements over time!
Take Control of Your Financial Future
Your FICO score isn’t just a number—it’s a powerful tool that can open doors to better financial opportunities. At Jordan Credit Union, we’re committed to helping you understand, manage, and improve your credit so you can achieve your goals with confidence.
