AmeriCU Credit Union – Credit Repair Kit
Helping AmeriCU Members Improve Their Financial Fitness
How one manages credit plays a major role in most people’s lives, that’s why understanding what credit is and how it
works is so important. A great way to increase your understanding of credit is by building your basic knowledge of two
credit fundamentals: Credit Scores and Credit Reports.
Your Credit Score is a number based on information in your credit file showing how likely you’ll pay a loan back on
time.The higher your score, the less risk you represent to a potential lender. The credit score that most lenders use
is called a FICO® score.Your FICO score helps a lender determine the interest rate you'll pay on a loan and may be a
factor within the lenders’ underwriting criteria. Many lenders utilize “managed credit” or “risk-based lending” practices
that correlate a higher risk (based on past credit behaviors) with a higher rate. Higher FICO scores result in lower
interest rates (reducing expenses related to borrowing).
FICO Scores are based on multiple pieces of data, both positive and
negative, grouped into five categories.The percentages in the chart reflect
the importance of each category, in general, in determining your score.
A score takes into consideration all these categories of information,
therefore no one category, piece of information or incident alone will
determine your score.
• Payment History – includes length and amount owed on past-due accounts, adverse public records (bankruptcies,
judgments, etc…), past due items, accounts paid as agreed, etc…
• Amounts Owed – number of accounts with balances, amounts owed on accounts, balances used (as a portion
of total credit available), etc…
• Length of Credit History – time since accounts opened, since account activity
• New Credit – number of recently opened accounts, amount of time since opened, time since credit inquiries,
re-establishment of positive history following past payment problems, etc…
• Types of Credit Used – number of various types of a