We regularly offer free webinars on a variety of money topics. One of the most popular is our seminar on credit scores. This webinar takes the mystery out of understanding a credit score, and people have an opportunity to get their questions answered.
So, what are they asking? Here are the top three questions we've fielded during our seminars and webinars:
You can have a squeaky clean payment record and still have a less-than-great score if you carry balances on your credit cards. Just using more than 30% of your limit can affect your score.
Have you recently closed an unused card? That could reduce your capacity. Plus, if it was your oldest card, your length of credit may have changed.
An installment loan is a set loan amount, paid off over time, and is usually backed by collateral. Think of a car loan (the car itself) or home equity loan (the property). Revolving credit can be used, paid off, and used again. A credit card is the best example of revolving credit.
Having an installment loan with a good payment history boosts your score. You are proving that you can handle debt and that lenders have trusted you in the past. With revolving credit, the lender could get burned if you suddenly run up your balances and have trouble making payments.
It's like the difference between good and bad cholesterol. Installment debt keeps your credit healthy, as good cholesterol protects you from heart disease. Revolving debt can damage your financial health if it’s too high, just as high levels of bad cholesterol can damage your physical health.
First, look at the top summary to find your total balances of installment and revolving debt and your percent of available credit. That will help you calculate your capacity. You can also easily see how many credit inquiries you’ve had recently, your length of credit, and whether there are any late or missed payments in your report.
Second, look at the individual lines of credit. Check out the payment history. It will tell you the exact payment reported as late or missing, so you can follow up or correct errors.
We answer quite a few other questions during our credit score seminars. Please check our events pages for upcoming webinars and seminars.
You can also learn to read a credit score by requesting a credit score review of your own. It is a free service for our members†
†Note that Hanscom FCU's Credit Score and Report Review requires a hard pull on your credit, which will temporarily reduce your credit score.
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