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Your credit score, demystified.

A credit score is a number between 250 and 850.  If you have ever purchased a car, used a credit card or signed a lease, you have one.  It's the number most lenders use to determine whether to loan you money.

Credit scores were actually invented to make the loan decision process more equitable and objective.  Your credit score is determined by three credit reporting agencies - Experian, TransUnion and Equifax - based on these and other factors:

  • The amount of credit you've already been granted.  (You don't want too much, or too little.)
  • How long your accounts have been open. (Longer is better)
  • How many times you've paid late.  (Ideally the answer is never.)
  • How promptly you pay your taxes, utilities and insurance.  (Just assume that everyone reports.)
  • Your account balance relative to your credit limit.  (A monthly balance that's 30% of your limit looks good to the number-crunchers.)
  • Even small bills you may have neglected.  (Think library fines, traffic tickets, charges you disputed.)

Take charge of your credit rating.

It's a weird feeling to know that someone out there is keeping score.  But credit ratings are here to stay.  A good credit score - 750 or more - can save you thousands of dollars every time you take out a mortgage or ask for a loan.

But let your credit score dip below 700, and we're sorry to say, the losses can add up to $20,000, $50,000, even $100,000 over the years.  If you want to know why your credit score matters, ask yourself these questions:

  • Do you prefer to pay 9%, or 19% in credit card interest?
  • Do you want to save hundreds a month when you buy a home or car?
  • Will your parents need to cosign the lease for your first apartment?
  • Do you want to qualify for the best possible insurance rates?
  • When potential employers look up your credit report (35% of them do), will they wonder about your ability to meet your obligations?

The good news is, you can take control of your credit score.  You just have to pay attention to the same things the reporting agencies do. 

By law, you can receive a free copy of your credit report once a year.  We urge you to get your free report.  It takes just a few minutes online.  Review it yearly to detect fraud and correct errors.  To download your free credit report from all three agencies, go to

And to learn more about credit scores, visit:

The Federal Trade Commission
The Indiana Department of Financial Institutions Credit Information

How to boost your credit score.

  1. Check your credit report for errors. If you find it hard to decipher, your local Ameriana banker can meet with you in private to help you understand what's there.  And if you spot errors or oddities, get in touch with the rating agency to set the record straight. 
  2. Pay on time. Your payment history accounts for 35% of your credit score.  And when a payment slips your mind or gets lost, the ramifications last for years.  Ameriana's billpayonline is a great way to avoid mishaps.  Just go online and set up automatic payments for all monthly obligations.  If there's a reason you must pay late, be sure to call your creditor and explain.
  3. Don't max out your cards. These days, you need to stay well below your credit limits.  Owing more than 30% of your credit limit can lower your credit score, so keep a close watch on your balances in relation to your limits.  Monitor your monthly statement to make sure your limits haven't been changed.
  4. Limit credit applications. Every time you complete a credit application, it can lower your score. Even moving balances between cards to earn a lower interest rate can affect your score, so be careful how many credit cards you have and applications you complete. If you do transfer a balance, close your old credit card account, because available credit also affects your score.

Need some additional advice or have questions about credit scores? Please Contact Us.

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