Plan for Your Future

Improve Your Credit Score

If you are confused about what factors determine a good or bad credit score, you're not alone. At California Coast Credit Union, we can help take the guess work out of understanding your credit report and ultimately determining your credit score.

Have you ever wondered how you can get an online pre-approval for a loan without ever stepping foot in a branch? Or how your neighbor got a better or worse interest rate on their mortgage than you did? The answer to both of these questions has to do with your credit score. Your credit score is a number which is generated by assessing your financial profile in five specific categories and then using a mathematical formula to calculate your credit-worthiness. The five categories which are used to determine your credit score are:

1. Payment History.
35% of your score is determined by how you've paid your bills in the past. This one category comprises the largest percentage of your credit score and is by far the most important factor in determining your credit-worthiness. Did you pay them on time or were you always late? Having an account sent to collections is a very negative factor, and declaring bankruptcy is even worse. Paying all your bills on time or before they are due is the best way to ensure that you score high in this category.

2. How Much You Owe When Compared To Your Available Credit?
30% of your credit score is weighed in this category, making this the second most important factor in determining your credit-worthiness. The amount of money you owe on credit cards, car loans, mortgages, home equity lines-of-credit etc., in relation to the amount of credit you have available indicates to a prospective creditor how likely you are to incur additional debt and how you handle your current debt. Generally speaking, the lower your credit balances and the more sparingly you use credit, the higher your score.

3. Length Of Credit History.
15% of your credit score is determined by your credit history. Although not weighed as heavily as the previous categories, the length of time which you've had credit and the more history you have had with a particular creditor, the higher your score in this area.

4. Mix Of Credit.
10% of your score is determined by the mix of credit in your portfolio. Different kinds of loans are measured differently; for instance, a mortgage or car loan is not weighted the same way as revolving credit such as credit cards. Typically, the best credit score will be one that consists of a variety of loan types- secured and unsecured- because it indicates to a perspective creditor that you are responsible and can handle money.

5. New Credit Or Applications.
The remaining 10% of your credit score is measured in this category. An individual who appears to be shopping for new credit can appear as a potential risk to creditors, especially if there is also recent evidence of accounts sent to collections or late payments. If, however, you are rate shopping for a mortgage or auto loan, then these applications will be viewed as a single inquiry and will have little effect on your credit score.


Although creditors may use some of the following factors to determine your income and ability to repay a loan, your credit score will not be calculated based on these areas: age, race, length of employment, income level, marital status, whether you rent or own your home, your current address, or whether you've been turned down for credit in the past.

As you might imagine, credit scores are not an exact science because they rely in large part on the accuracy of the information found in your credit report. Errors found in credit reports are quite common, which is why it is so important for you check your credit report for accuracy at least once a year, and definitely within three to six months before you make a major purchase such as a car or a home. This way, if you do discover any discrepancies in your credit report, you can resolve them before they affect your chances of getting the best rate on your loan.

At California Coast Credit Union, we are here to help you understand and optimize the power of your credit report. Contact Us today to schedule a complimentary review of your credit report with a certified professional and find out how it can effect your financial future. For Central & North County/Murrieta, contact Taralyn Rose at (858) 467-7583. For South & East County/Downtown, contact Randy Brungardt at (619) 542-5231. Appointments available at the following branches: El Cajon, Hillcrest, National City, Kearny Mesa, Escondido and Murrieta Hot Springs. We've been in the business of helping people just like you since 1929. It's just another example of how we are continually there for you and all of your needs because at california Coast Credit Union, we have your best interest.