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What Is a Credit Score?

Your credit score is a snapshot of your credit use at a particular point in time, stated as a number. This number predicts how likely an individual is to pay bills and make payments on time.

Having a good credit score can make your financial dealings easier and save you money in lower interest rates for credit cards, auto loans, home loans and other kinds of credit. Credit scores are an important part of your overall financial health.

Calculating your score

Credit scores are based on five main areas of information in your credit report, which are added together for your total credit score. They are:

  • Payment history (35%) – The most important factor is how you’ve paid your bills in the past, with emphasis on recent activity.
  • Amounts owed (30%) – Owing too much or having credit cards approaching their credit limits may lower your score.
  • Length of credit history (15%) – In general, a longer credit history is better.
  • New credit(10%) – Opening multiple new accounts in a short period of time may lower your score.
  • Types of credit in use (10%) – The best scores have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans.

What does the score mean?

Credit scores range from about 300 to 850. Most scores fall between 600 and 800, with the average about 750. The higher your score is, the better your chances are of getting a loan. Your score is also a factor in what your repayment rate will be.

Improving your score

Your credit score is a fluid number. It changes as information is added, changed or removed from your credit report. Raising your score requires time and patience.

Here are some useful steps you can take.

  • Check your credit report regularly to see if information is correct.
  • Pay bills on time, especially mortgage or rent payments.
  • Keep balances low on credit cards. Account balances should be below 75% of your available credit.
  • Pay off debt rather than moving it around.
  • Pay more than the minimum required on your credit card. Large credit card balances hurt your score.
  • Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix. It probably won't raise your score.
  • If you’ve missed payments, get current and stay current. The longer you pay your bills on time, the better your score.

If you have any questions about your credit score or if we can help you in any way, please contact Member Services at (804) 323-6800 or (800) 285-6609.