CHHS Student Success Center

Financial Readiness

Credit: Building and Repairing

Your credit score, or FICO score, affects interest rates, approvals for a loans, cell phones, apartments, auto insurance rates, and much more. For example, interest rates on a 30-year fixed mortgage could have you paying $150,000 with a high credit score or $220,000 with a low credit score.

The percentages below reflect how your credit score is calculated. Events stay on your credit report for seven years.

  • (35%) Pay ALL your bills on time (not just credit cards). If you cannot at least pay the minimum, contact your creditor and determine you best option. If you cannot pay all of your bills, pay the bills that have been overdue the longest (the longer a payment is due, the more it hurts your credit). Once an account has been back in good standing for a while, ask a lender to erase late payments. Consider enrolling in Auto-Pay or set up payment reminders to make sure you don't miss a payment.
  • (30%) Reduce each balance, and all balances collectively, on credit accounts to 10% or less of your available credit, or ask your creditor for an increase in the available credit amount. The lower your debt utilization is, the better your score will be.
  • (15%) Keep old credit accounts and use them, because history is important. Keep in mind, cutting up a card does not cancel the account. Having and using 2-5 revolving credit accounts is usually recommended. Even a small charge and paying it off counts as an on-time payment. Consider spreading your purchases over multiple credit cards.
  • (10%) Keep inquiries to your credit to a minimum. Each inquiry has a negative impact for a short period.
  • (10%) Having a mix of credit, both revolving (i.e. credit cards) and installment (i.e. auto loan, mortgage) can also boost your score.
  • Other factors creditors consider: length of time at present address, length of time and stability of job, if you are a renter vs. homeowner, amount in savings/retirement accounts, stocks and other holdings, income, and debts.

Identity Theft and Freezing Your Credit: Stop identity thieves from getting new credit in your name by placing a security freeze on your credit. You can temporarily unfreeze your credit whenever you need to allow a business to run your credit. See the NC DOJ for more information on freezing and unfreezing our credit. 

Credit Reports: You can obtain three free credit reports (one from each bureau) every 12 months from www.annualcreditreport.com. If you want your credit score, this will cost extra. Requesting your own credit report has no impact on your credit score. Need credit counseling? Visit www.nfcc.org or www.cccsstl.org.