Keeping You in the Green

Dreamy girl in park with laptop

The month of March is all about the green. You’ve got St. Patrick’s Day, the first day of spring, and it’s also National Credit Education Month. So it’s a great time to take a look at your credit report and see what you can do to improve it!

You probably already know that your credit score is a three-digit number that financial institutions use when figuring out the interest rate on a loan you want. The lower your credit score, the higher your interest rate. If your score is TOO low, you might even be denied for the loan. (Let’s not go there, though!)

So, what goes into a credit score? Your credit score is determined by formulas that look at what is listed on your credit report. A credit report is an organized list of the information related to your credit activity, such as:

  • a list of businesses that have given you credit or loans.
  • the total amount for each loan or credit limit for each credit card.
  • how often you paid your credit or loans on time, and the amount you paid.
  • any missed or late payments, as well as debts that have been turned over for collections.

Whew! OK, that’s the credit report, and now we’re back to the original question: What goes into your credit score? Five factors are calculated in:

  1. Your payment history (35%)
  2. How much you owe (30%)
  3. The length of your credit history (15%)
  4. The types of credit you have (mortgage, credit cards, student loans, etc.) (10%)
  5. How actively you establish new credit accounts (10%)

The percentages show how heavily the factors are weighted for most people. In the basic model, how much you owe is more important than the types of credit you have. But these percentages shift around a lot, depending upon the overall info in your credit report.

There is no magic bullet to boost a credit score overnight. But that doesn’t mean you’re stuck with a low score forever. There are steps you can take NOW to start moving that score in the right direction!

Things like…

  • Pay your bills on time. Late payments and collections can have a major negative impact on a credit score.
  • Keep balances low on credit cards. A maxed-out card can really hurt. If you have a credit card you make payments on (instead of paying off the entire amount every month), try to keep the balance at one-third of the max. So, if a card has $9,000 credit limit, aim to keep the balance under $3,000.
  • Apply for and open new credit accounts only as needed. Sure, it’s tempting to “save 20% today” with a new store credit card. But ask yourself: What do I want more? A lower price on those shoes or a better rate for my next car?

If you’ve been managing your money a little haphazardly, taking a look at your credit report may be a scary thought. But seeing where you stand, especially if you think your report is less than stellar, is the first step to a better score.

You can get one free credit report per year from each of the three main credit bureaus (Equifax, Experian, and TransUnion) by going to www.annualcreditreport.com. (Go ahead. Do it!)

So, as we wrap up the very green month of March, take the time to review your credit reports and then take action to boost your score. It could mean more green in your pocket!


Kathleen joined Linn Area as a member in 2003, and she loved it so much she started working at the credit union in 2014. You may recognize her voice if you’ve ever called us. She works the phones, helping members with everything from technical questions about eBranch to account balance inquiries and transfers.