Credit Score

Understand Your Credit Score

AurGroup believes in providing you with the financial education tools you need to improve your life. Your credit score is a very important aspect of your finances. Credit scores are often times used to determine which services you qualify for and what they will cost. Knowing your score and how to improve it can save you money.

A credit score is a three digit number based on the information that is on file regarding your credit. A credit score can range from 850-300. The score is an indicator of how likely one is to default on a loan. The higher the score, the less assumed risk to the lender.

What Determines Your Score?

Your credit score is calculated based on several factors from your credit report, and is a result of five basic items:

  • Based on your payment history - A solid history of on-time payments will raise your score

  • Based on your outstanding debt or capacity - Capacity is figured by looking at your credit limits in relation to your balances. To keep your score high, you want to keep balances under 35%

  • Based on your length of credit - You become a less risky borrower with an established credit history. Be sure to keep old accounts open

  • Based on the accumulation of debt in the last 12-18 months - Try to apply for credit in moderation. Recent (and/or frequent) inquiries made for the purpose of extending credit can lower your score

  • Based on your types of credit - You want to have a good mix of credit accounts (revolving credit) and loans (installment credit)

How does your score rate?

  • Above 750 - Excellent

  • 720-750 - Very Good

  • 660-720 - Acceptable

  • 620-660 - Uncertain

  • Less than 620 - Risky

Fact or Fiction?

There are a variety of myths as to what you should and shouldn't do to improve your credit score. Test your knowledge below by answering true or false to each of the following statements.

Statements:

  • Your score will not drop if you check your credit

  • Closing old accounts will improve your credit score

  • Once you pay off a negative record, it is removed from your credit report

  • Being a co-signer makes you responsible for the account

  • Paying off a debt will add 50 points to your credit score

Answer:

  • True. A "soft inquiry" is made when you check your own report and doesn't harm your credit. Only "hard inquiries" (those made by a lender when applying for credit) can bring your credit score down a few points

  • False. In most cases, canceling old credit accounts can lower your credit score by making your credit history appear shorter

  • False. Negative records (late payments, bankruptcies, collection accounts) will remain on your credit report for 7-10 years. Paying off your debts can improve your score; however, paying off the account doesn't remove it from your credit report

  • True. When you co-sign on a loan, you are assuming legal responsibility for the account. Any activity on these shared accounts will show up on both the borrower's and co-borrower's credit reports

  • False. Your credit score takes into account hundreds of factors and is calculated by using a complex algorithm. Therefore, it is hard to predict how much a score will change by just changing one factor

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Everyone's credit file can be improved in some way. With a little knowledge and time, it is not difficult to raise your credit score. AurGroup offers its members a unique opportunity to learn more about your credit score and tips on how to improve it. A credit analysis is a great way to ensure your credit report is accurate and to check for problems or identity theft issues. Request your free credit report analysis by simply filling out the form below.