DJ Hassan’s Financially Fit Interview: How Your Credit Score Affects You

This week on  Financially Fit Thursdays, I spoke with Senior Vice President Kawanza Humphrey about something a lot of people are easily intimidated by — credit scores. I asked her, What is a credit score? And what does that number say about you?

You can listen to the whole interview here:

I thought she did a really good job of explaining it in a way that's easy to understand:

Credit scores are created by taking information from credit reports and analyzing that data to forecast how someone is likely to behave in the future. Your score is determined by factors like how much debt you carry and whether you've paid your bills on time.

Kawanza added the highest score you can have is an 850 and anything above 700 is considered average.

But why is having good credit important? Kawanza answered:

Having good credit is important for major life purchases like a home or a car, but you need good credit lines to get good credit. Most lenders will not give you a credit line if you don't already have good credit.

But wait, how do you build good credit if you don't have a credit card?

A secured credit card is a great option for people looking to build or rebuild their credit score. With a secured credit card, you put a sum on a deposit at the issuing bank, either a percentage of the equivalent of the credit line. For example, a credit card issuer might request a $250 security deposit for a $250 credit line. This way the bank has the money for the balance of your charges on deposit at all times, making you a less-risky person for them to issue a credit card to.

And what are some things you can do to improve your credit score?

The most important thing... pay your bills on time: A single payment made 30 days late can have a significant impact on your credit score. If you're having trouble paying your bills, there are steps you can take to soften the blow to your credit score and buy some time to get your money management back on track. Also, make sure that you never spend or charge more than you can pay off in a single month.

Ready to build or improve your credit? Learn more here about KeyBank's secured credit card and read more from KeyBank about debt and credit here. To talk with a friendly bank about how KeyBank can help you boost your financial fitness, visit one of their convenient Buffalo locations; you can search for the nearest location here.