credit score

Money 101 - Key Steps to Build Your Credit Score

Things you can do to improve your score


Credit scores range between 300 and 850, but getting a perfect score of 850 is very hard to do. While perfection might be difficult, improving your credit score is doable. Improving your credit score can help you by providing better annual percentage rates on loans, and help you qualify for a mortgage, lease, or auto loan. But how do you know if you have a good score?

There are two main credit scoring systems: VantageScore and FICO. They score your credit report differently, so knowing which score you’re looking at is important.

FICO looks at these factors to determine your score:

Payment history (35%) – Whether you’ve paid your credit accounts on time

Amounts owed (30%) – The total of all your account’s limits and what you owe on each

Length of credit history (15%) – How long you’ve had credit accounts

New credit (10%) – How often you’ve applied for and opened new accounts

Credit mix (10%) – The mix of credit including credit cards, loans, installment loans, etc.

Your FICO score by range:

300-579 – Very poor

580-669 – Fair

670-739 – Good

740-799 – Very good

800-850 – Excellent

VantageScore looks at these factors to determine your score:

Payment history – Extremely influential

Type and duration of credit and percent of credit limit used – Highly influential

Total balances/debt – Moderately influential

Available credit and recent credit behavior and inquiries – Less influential

Your VantageScore score by range:

300-499 – Very poor

500-600 – Poor

601-660 – Fair

661-780 – Good

781-850 – Excellent

Now that you have a better idea of how your score lines up with these two major credit scoring systems, you can take steps to improve your score. Here are some steps you can take to build on your score.

Make on-time payments – Paying your loans and other bills on time will have a positive impact on your credit score. Set up autopay or reminders to ensure timely payments. Peoples State Bank’s digital banking tools include BillPay, which allows you to set up recurring payments for bills with a set monthly payment, or the ability to pay varying amounts on a schedule that you determine.

Pay in full – While you should always pay at least the minimum payment, it’s recommended to pay your bill in full every month. It helps your credit score because it shows the ability to pay while lowering the amount of what you owe versus your credit limits.

Avoid opening extra accounts – Each time you apply for credit, an inquiry shows up on your credit report. Each of these inquiries will “ding” your credit score by about five points, although it will bounce back within six to 12 months. Try to limit how many accounts you open in a short period of time.

No credit needed – If you’re just starting out, you might not have a credit history. Build it wisely by apply for “No Credit Needed” payment options or look for secured credit card options.

Build wisely – Utility bills that are in your name can help you build credit. So can store credit cards. But be careful with store credit cards as they sometimes have very high interest rates, so if you carry a balance from month to month you’ll pay more for the credit. Buy items wisely and try to pay your credit in full on those cards with high interest rates.

Avoid credit limits – Many of the credit scoring models look at how close you are to being “maxed” with your available credit. Try to keep your balances low compared to your total credit.

Build your credit history – Scores improve when you have a long history of credit and payments. Sometimes closing a card that you’ve had for a long time will negatively impact your score.

Dispute errors – Review your credit report on an annual basis, and if you see errors, try to have them corrected.

If you believe you can’t repay your creditors, contact them immediately and explain your situation. Ask about renegotiating the terms of your loan, including the amount you repay. Reputable credit counseling organizations can help you develop a personalized plan to solve your money problems, but less-reputable providers offer questionable or expensive services or make unsubstantiated claims. If you have a problem with credit reporting, you can file a complaint with the Consumer Financial Protection Bureau. You can learn more about credit and personal finances from a Peoples personal banker. Stop by a bank location or call 888.929.9902 to speak to one today.

Christy SeidelChristy Seidel
Personal Banker
Christy serves Peoples State Bank customers in our Rhinelander location. As a personal banker, Christy can assist you with your banking needs, from opening a checking or savings account, loan applications, and questions you might have about our banking products.

715.420.2113 |