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It's A Money Thing: Credit Score Breakdown

You’ve likely heard about credit scores before, but what do you actually know about them? What makes up a credit score?


A credit score is a number (usually between 300 and 850) that represents your creditworthiness. It’s a standardized measurement that financial institutions and credit card companies use to determine risk level when considering issuing you a loan or a credit card. Basically, it provides a snapshot of how likely you are to repay your debts on time. Widespread use of credit scores has made credit more widely available and less expensive for many consumers.

The credit scoring system that we’re familiar with today has been around since the 1980s. Before then, there was no standardized way to measure creditworthiness, so it was up to individual lenders to make judgment calls on whether or not to loan money to someone. The old system was time-consuming, inconsistent and quite biased, so a credit scoring system was introduced.

The FICO score is the best known and most widely used credit score model in North America. It was first introduced in 1989 by FICO, then called Fair, Isaac and Company. The FICO model is used by the vast majority of banks and credit grantors, and is based on consumer credit files from the three national credit bureaus: Experian, Equifax and TransUnion. Because a consumer's credit file may contain different information at each of the bureaus, FICO scores can vary, depending on which bureau provides the information to FICO to generate the score.

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When credit scores were first introduced, they were used primarily for loaning money. Today, credit scores have much more pull, and that’s why it’s important to understand how they’re calculated. Your monthly car payments, your ability to snag that sweet apartment and even the hiring manager’s decision on that new job you applied for can all be influenced by your credit score.

A credit score of 720 or more is considered prime—this means you’re in good shape. Scores under 550 mean you could be turned down for a loan. Scores in the good-not-great range (550 to 720) might get you loan approval, but your interest rates will be higher than if you had a prime credit score. Nobody likes the idea of paying more money for no reason, so it makes sense to adopt credit habits that will boost your overall score.

Taking the time to familiarize yourself with how credit scores are calculated is the first step in getting a strong score. Each credit bureau uses a slightly different calculation, but the basic breakdown goes like this:

35% is based on payment history. Making payments on time boosts your score.

30% is based on capacity. This is one of the areas where the less you use of your total available credit, the better. If you get close to maxing out all your credit cards or lines of credit, it tanks your score, even if you’re making your payments on time.

15% is based on length of credit. Good credit habits over a long period of time raise your score.

10% is based on new credit. Opening new credit cards (this includes retail credit cards) has a short-term negative effect on your score, so don’t open a whole bunch at once!

10% is based on mix of credit. Having a combination of different types of credit (like revolving credit and installment loans) boosts this part of your score. Credit cards are considered revolving credit, and things like car loans and mortgages are installment loans.

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Curious about your credit report? You are entitled to one free credit report per year from each of the major credit bureaus. Spacing out your credit report requests allows you to check on your credit every four months or so. Request yours online by visiting annualcreditreport.com.

When you receive your credit report, you’ll notice that it does not list your three-digit credit score. Despite this, it’s still a helpful reference because it serves as the basis of your credit score. If you know how a credit score is calculated, then you know how to look for factors on your credit report that might be influencing your score for better or for worse. It’s also an easy way to look at account openings, account closings and what your repayment history looks like.

To get access to your actual credit score, there’s often an extra fee involved (usually between $15 and $25). An alternative is to visit creditkarma.com. This service provides an estimate of your credit score for free. Just be aware that this score uses a different calculation than FICO does, so while it comes pretty close, it still won’t be exact.

Some commercials make it seem like credit scores are big, mysterious, randomly assigned numbers. But with a little research, a little patience and some good habits, you can influence your credit score in a positive way and not be caught off guard by a denied loan or an outrageous interest rate.

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Frequently Asked Questions

  • Which loans are eligible for Skip-A-Pay?

    Auto loans, recreational loans, and personal loans are all eligible for Skip-A-Pay. This includes boat loans, RV loans, 4-wheeler loans etc. To learn more about if you have an eligible Skip-A-Pay loan, call us at 256-383-9204 or 1-800-239-6033 to speak with a Member Advocate.

  • When should I request Skip-A-Pay?

    In order to have your Skip-A-Pay request processed before your loan payment is due, please submit your skip request five (5) business days in advance of the scheduled payment date.

    Example: If your next loan payment is due on June 20th, you would need to submit your request no later than June 12th.

  • How do I request Skip-A-Pay?

    To request Skip-A-Pay, click the "Request Skip-A-Pay Now" button above, agree to do business electronically, and fill out the online form. You must also provide payment for the $25 fee before your loan payment can be skipped. This fee can be transferred from your Listerhill checking or savings account or paid from an outside account.

  • What is Skip-A-Pay?

    Skip-A-Pay is a service we provide to Listerhill members who make six (6) or more on-time payments for their auto loans, personal loans, etc. Members can request Skip-A-Pay, submit a $25 fee, and skip paying on an eligible Listerhill loan twice a year. During more expensive times, like the holidays or the Summer months, Skip-A-Pay can be a great tool that helps keep your payments on time while allowing your family a little extra spending money when you need it.

  • What loans are not eligible for Skip-A-Pay?
    1. Real Estate Loans (1st and 2nd Mortgage and Home Equity Lines)
    2. Business Loans
    3. Lines of Credit (Kwik Kash, Anytime Credit, Overdraft Protection, and Credit Cards)
    4. Christmas Loans
    5. Single Pay Term Loans
    6. Loans with Less than 6 Monthly Payments
    7. Loans Currently Past Due More than 10 Days
    8. Loans that Received Maximum Extensions (six skip pays and/or extensions allowed during the term of the loan)
    9. Workout Loans or Troubled Debt Restructuring (TDR)
    10. Accounts in Bankruptcy
    11. Charged-Off Loans
    12. Loans on Accounts with a Negative Checking or Savings Balance
    13. Accounts with Bad Addresses