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Understanding Your Credit Score

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This number will impact your finances, especially if you're looking to get a loan

Interest rates aren't just the numbers that determine how much money a financial institution will earn by giving you a loan; they are also rewards for handling your bills and other credit obligations responsibly. The lowest interest rates for auto, home and personal loans are given to those individuals with the highest credit scores, because they have proven not only that they can handle debt but also that they will follow the terms of the lending agreement.

What's in a credit score?

In order for creditors to create a fair set of standards to help determine credit risks, they typically rely on a FICO score - the most widely used credit score model in the U.S. To create your score, software analyzes your credit report and takes five pieces of information into consideration:

According to, your payment history is the most important factor in your credit score, representing a total of 35 percent of the weight of the calculation, whereas the types of credit used and amount of new credit are the least important, each representing only 10 percent of the weight.

How your credit score affects your loan

Lenders reward those borrowers who present the least amount of risk of default. The higher your credit score, the more you've proven to existing and potential creditors that not only can you afford to pay your debts but also you are responsible enough to make payments on time as agreed.

It's important to remember that credit scores don't reflect just your ability to pay your debts but also your willingness to do so. If you have an extremely low debt-to-income ratio but never pay your bills on time, your credit score will reflect that, and it will not look attractive to potential lenders.

As your chosen financial institution, we want to work with you to help you get the best rates that you can qualify for. Give one of our loan officers a call or stop by, and together we can make your dreams of car or home ownership a reality.

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