Your Credit Score | Meritrust Credit Union

Posted on July 10, 2026 | Posted in Financial Education

Your credit score can have a major impact on your life. Not only do creditors typically check your score when deciding whether or not to approve your loan application and what interest rate to charge you if you are approved, but landlords, insurance companies, and even employers often check it as well. Having a good score can help you achieve your goals quickly and save you money with lower loan interest rates.

What is a credit score?

Your credit score is a number that estimates how likely you are to repay what you borrow. It is based on the information in your credit report, which tracks your credit-related activity. Types of credit include credit cards, store cards, personal loans, car loans, mortgages, student loans, and lines of credit.

For each account, your report shows who it is with, your payment history, the initial amount borrowed (for loans) or credit limit (for revolving credit), the current amount owed, and when it was opened/taken out. Your report also shows if you have experienced any credit-related legal actions, such as a judgment, foreclosure, bankruptcy, or repossession, and who has pulled your report (called an inquiry).

There are three major credit bureaus that compile and maintain credit reports: Equifax, Experian, and TransUnion. Theoretically, all three of your reports should be the same, but it is not uncommon for creditors to report to only one or two of the bureaus.

FICO score

The most commonly used scoring model is issued by the Fair Isaac Corporation. Called a FICO score, it ranges from 300 to 850, with a higher score being indicative of less risk.

Generally, those with a higher score are more easily granted credit and get a better interest rate. A score of 700 and above is typically considered good, while 800 and above is excellent. However, most scores fall between 600 – 750, according to Experian.

If your score falls below 600, you will probably have a hard time getting a mortgage (many lenders require you to have at least a 620 or higher). To get the best interest rate, you usually need at least 740.

The following are the factors that are used to calculate your FICO score:

Payment history (35%): Making your payments on time boosts your score. Conversely, if you make a late payment, your score will take a hit. The more recent, frequent, and severe the lateness, the lower your score. Collection accounts and legal actions have a serious negative impact.
Amounts owed (30%): Carrying large balances on revolving debt, like credit cards, particularly if those balances are close to the credit limits, will lower your score.
Length of credit history (15%): The longer you have had your accounts, the better.
New credit (10%): This factor looks at the number and proportion of recently opened accounts and the number of inquiries. While many inquiries on your report will lower your score, all mortgage or auto loan inquiries that occur within a 45-day period are considered just one inquiry for scoring purposes. Accessing your own report is not damaging to your score nor are inquiries from pre-approval offers. Having new accounts can hurt your score, but if you have had a history of late or irregular payments, reestablishing a positive credit history will be taken into account.
Types of credit used (10%): Having a variety of accounts, such as credit cards, retail accounts, and loans, boosts your score.

Since your Equifax, Experian, and TransUnion credit reports do not necessarily contain the same information, your FICO score from each bureau may be different. When you apply for credit, the creditor may only check one of your scores or check all three and average them or take the lowest or middle score.

Improving your score

Following these habits can boost your score:

Always pay on time: Your payment history makes up the largest chunk of your credit score, so making your payments on time is extremely important.
Pay down existing debt: Even if you have never missed a payment, a large debt load will lower your score. Explore ways you can lower your interest rates and free up cash to make more than the minimum payments.
Avoid taking on additional debt: Besides paying down existing debt, make an effort to not take on more debt in the future. For revolving credit, ideally you should not charge more than you can pay off in full the next month, but for best results, try to keep your balance below 30% of your credit limit.
Keep in mind: your balance may be reported to credit bureaus before your due date. Paying down your balance before your statement closes can help improve your score.
Check your report for errors (and report them): Many reports contain score-lowering errors, so make sure to check your credit report from the three bureaus at least annually. You can get a free copy of your report once a year from the Annual Credit Report Request Service. Note: contact information for the three credit reporting agencies is listed below.
Keep your old accounts: A long credit history with the same accounts indicates stability.
Limit balance transfers: While transferring balances to “teaser rate” cards can be a way to efficiently get out of debt, it can also have a detrimental effect on your credit score. The accounts will be new and likely have balances close to the limit to maximize the advantage of the low rate – two factors that lower your score.
Avoid excess credit applications: When you apply for credit, your score decreases just a bit. If you do it frequently, a creditor may see it as a sign that you need to rely on credit to pay your obligations.
Be patient: It may feel like credit mistakes can haunt you forever, but remember that your payment history from the past two years is much more important than what happened before that. Most negative items remain on your credit report for up to seven years, while some, like bankruptcies, may last longer.

Obtaining your score

When you apply for credit, the creditor may provide you with your score at no cost. Many financial institutions and credit card providers now offer free credit score access as part of their services.

Since it is the mostly widely used, it generally makes the most sense to access your FICO score. However, even then, keep in mind that you may not be seeing the exact same score a lender will see. (There are different versions of the FICO score available. Additionally, there are many creditors that use an internally-created scoring model in conjunction with or in lieu of the FICO score.)

Checking your credit score can be helpful if you are planning to get a mortgage or car loan soon, and want to have an idea if you will get approved or qualify for the best interest rate. Otherwise, you may just want to stick with checking your credit report, which is available for free. Remember, your score is based on the information that is in your report.

Quick Credit Score Tips

Your bottom line quick credit score tips:

Pay every bill on time
Keep credit card balances low
Avoid opening too many accounts at once
Check your credit report regularly
Keep older accounts open when possible

Where to start

If you're interested in talking with someone about how to build your credit from scratch or to re-establish your credit after a hardship or major financial life event, the Meritrust Financial Well-Being Team is here to help! Contact us to set up an appointment to talk about credit today.