New Student Orientation Credit Audio
Credit Report and Credit Score
Speaker: Jenny Howk
A credit report is statement with information about your credit activity and loan paying history. Every
loan you have ever had and every credit card you have ever had will show up on your credit report. The
report will show such things as whether you made late payments on any loans, the balance you owe on
any loans, and how old your loans are. Everyone who has credit history will have a credit score,
sometimes called a FICO score, based on their credit history. The better you managed debt, the higher
the score will be. Your credit score can be affected by:
• Payment history – For a high credit score, make payments on time. This will account for about
35% of your score.
• Current debts – For a high credit score, don’t max out credit cards and line of credit accounts.
Creditors recommend keeping debt usage at 30% or less. This will account for about 30% of your
score.
• Credit history – If you keep credit accounts open so that you can show you have established
credit and managed it wisely over several years, your credit score will be higher. This will
account for about 15% of your score.
• New credit applications – When you apply for new loans or new credit cards, the lender will pull
your credit report to check your credit history. This can temporarily reduce your credit score.
This will account for about 10% of your score.
• Types of credit – Showing that you have maintained and managed a mix of installment loans
(like vehicle loans or student loans) and revolving loans (like credit cards) will raise your credit
score. This will account for about 10% of your score.
It is important to establish and maintain a good credit history. A high credit score can benefit you in
many ways. Good credit can give you access to more borrowing options at the best possible interest rate
and terms. Lenders will want to lend to you if you have shown by your credit score that you can manage
debt well. Insurance companies usually use credit scores to determine discounts and rates. When you
want to rent an apartment, landlords may pull your credit report to see how well you manage
payments. Employers may also pull your credit and check your FICO score when you apply for a job.
They can use this as a way to verify that you are responsible.
You should check your credit score or pull a credit report at least once a year. You can check your credit
report once a year using annualcreditreport.com. Be careful to read all the instructions and not
accidentally sign up for a monthly credit check service when using free credit report websites.
Sometimes your bank or your credit card will allow you to check your credit score through their app for
free anytime you want. You can ensure that there are no mistakes on your credit report by keeping an
eye on credit score changes and pulling a credit report once a year.
© Jenny Howk and Indian Hills Community College
