Community First Blog

What is a Credit Score?


Really understanding what your credit score means and how it can affect your life is one of the keys to getting your finances on track.


Your credit score can have one of the biggest impacts on your financial life. Your credit history may be reviewed by banks, cell phone companies, credit card companies and even potential employers. Understanding how it works will help you maintain healthy finances. Let’s get started.

A credit score is a three digit numerical rating that reflects how likely you are to repay your debt. This number is based on your credit history. Good money habits, like paying your bills on time, can help keep your credit score high. Poor financial habits, like maxing out your credit cards, can bring down your credit score. How are these scores ranked?

Bad Credit Scores

Scores below 500 are considered bad. Individuals could consider seeking professional help to rebuild their credit history. For additional information about your credit score, contact a Community First representative.

Poor Credit Scores

Individuals with credit scores in this 500 to 590 range usually have several accounts in collection, are no longer paying back their debt, or have filed for bankruptcy. Such individuals may not qualify for loans, or may qualify for those only with high interest rates.

Fair Credit Scores

Individuals with credit scores in this 590 to 650 range may have late payments or negative information on their credit history. It is possible to secure a loan in this range but the terms may not be favorable.

Okay Credit Scores

Individuals in this 650 to 680 range may have blemishes on their credit report and could be restricted to higher-than average interest rates.

Good Credit Scores

Credit scores in this 680 to 720 range will allow individuals to qualify for most loans. Individuals in this range likely have a solid credit history with a few missed or late payments or a shorter credit history.

Excellent Credit Scores

Individuals with credit score above 720 have the strongest credit history and qualify for the best loan terms and interest rates.

Credit Score Components

Payment History

  • Do you pay your bills on time?
  • Do you always pay at least the minimum?
  • Even one late payment has a negative impact
  • That’s why it’s important that you always pay your bills on time

Amounts Owed

  • How much do you owe?
  • Do you have several loans, credit cards, utility bills, store cards, etc.?
  • What percentage of your credit are you using?
  • People who use less of their available credit are considered lower risk

Length of History

  • Have you been using credit for ten weeks or ten years?
  • Someone with a longer history is considered less of a risk

New Credit

  • Have you applied for any new lines of credit recently?
  • Applying for a lot at once could lower your score

Types of Credit

  • Do you have a variety of credit types, like credit cards, auto loan, mortgage, student loans, etc.?
  • Having more credit types may increase your score

Now that you have a better understanding of what your credit score actually means, make sure to take good care of it. Keep track of your credit reports on a regular basis, and adopt responsible credit habits so your score can be as high as possible.

Take our Credit Scores and Reports module to learn more.

If you have any questions or concerns about your credit score or any of its components, Community First Credit Union can help. Give us a call or stop by and speak with one of our personal bankers today. We can answer your questions and give you advice so you can make your credit score work for you.

*These credit score ratings are for informational purposes only. Lenders and other companies that use credit scores set their own guidelines.