Understanding Your Credit Score

What is a credit score?

A credit score is a number calculated to rank the creditworthiness of a person.

How is my credit determined?

The actual formulas for calculating a credit score have never been revealed by the Federal Trade Commission or various credit agencies, however, we know the score is based primarily on credit report information from the credit agencies. This information generally includes information on your outstanding debt, credit history and length, credit type (bank cards vs. retail or department store cards) and inquiries into your credit score. Some scoring models include your trends in credit balances, credit limits and minimum payments due.

How do I establish a credit score?

In order to establish a credit score, you will need one credit account open for six months or more and enough information in your credit report on which to base a credit score.

What is my credit score used for?

Once you have an established credit score, it is used for approving new loan accounts, increasing lines on existing loan accounts, determining what rate you will pay for a loan and reissuing or canceling cards.

What is a good credit score?

Different companies use different credit score scales but typically scales generally range from 300 to 850 or 350 to 950. The higher the score the better the credit risk; the lower the score the worse the credit risk. You can check your score by logging into Merchants Banking Online Banking and enrolling by clicking on Credit Score.

How can I get my free credit report?

Follow the instructions below.

The three nationwide consumer reporting companies have one central website, toll-free telephone number, and mailing address through which you can order your free annual report. To order choose from an option below:

• Go to www.annualcreditreport.com
• Call (877) 322-8228
• Complete the Annual Credit Report Request Form and mail it to:
  Annual Credit Report Request Service
  P.O. Box 105281 Atlanta, GA 30348-5281

Through Annual Credit Report, you may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide consumer reporting companies every 12 months.

There will usually be a charge to actually obtain your credit score, but the credit report itself is free. The report will help you verify if the information on amounts owed and timelines of payments is accurate.

What information do I have to provide to get my free report?

You need to provide your name, address, Social Security Number, and date of birth.

If you have moved in the last two years, you may be asked to provide your previous address. 

To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources. 

If you choose to order your credit score as part of your report, you will be asked to pay. Credit or debit cards are the usual methods of payment.

annualcreditreport.com is the only authorized source for your free annual credit report from the three nationwide consumer reporting companies. annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email or see a pop-up ad claiming it’s from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message — it’s probably a scam. Forward any email that claims to be from annualcreditreport.com or any of three consumer reporting companies to the FTC’s database of deceptive spam at spam@uce.gov.

annualcreditreport.com or any of three consumer reporting agencies also will not call you to ask for your personal information.

Need to obtain a copy of your child's credit report?

Children can get their credit reports from the agencies listed above. Children under the age of 13 should have their parent or legal guardian request the information. Information about the child needed for a written request may include:

• Legal name
• Address
• Birthdate
• A copy of the child’s birth certification
• A copy of the child’s social security card

You will also need to provide documentation identifying yourself as a parent or legal guardian.

Why might my credit score be low?

A low credit score may have been impacted by any of the following factors:

• Serious delinquency
• Serious delinquency and public record or collection filed, such as foreclosures or bankruptcies 
• Derogatory public record or collection file 
• Time since delinquency is too recent or unknown 
• Level of delinquency on accounts 
• Number of accounts with delinquency
• Amount owed on accounts
• Proportion of balances to credit limits on revolving account is too high
• Length of time your accounts have been established
• Too many accounts with balances

How can I improve my credit score?

There is no quick fix to improving your credit score. A better score is the result of good credit history, which takes time to build. However, by taking the below steps you may be able to improve your score over time:

• Pay your bills on time. If you have any collections or past due payments, you want to pay them as soon as possible.
• Keep balances on your credit cards and other revolving credit (such as a line of credit) low. Using up most of the available balance or maxing out a credit account can affect your score. Owing more than 30% of your credit limit can lower your score.
• Apply for and open credit accounts when you need them. Trying to improve your mix of credit by opening new accounts typically won’t impact your score.