When it comes to your financial health, few things matter more than your credit score and credit report. These numbers influence whether you get approved for a loan, the interest rate you pay, your ability to rent an apartment… and more. Yet many people don’t really understand how credit scores are calculated, or how to improve them. Let’s break it down.
What Is a Credit Score (and a Credit Report)?
A credit report is your financial “history book.” It records your credit activity: credit cards, loans, balances, payment history, how long you’ve had credit, and more. It may also include public records, such as bankruptcies or liens.
A credit score is a three-digit number (typically ranging from about 300 to 850) that summarizes based on data from your credit report how likely you are to repay borrowed money. Lenders use this number to help decide whether to offer you credit and at what terms.
Think of the credit report as the full file, and the credit score as a snapshot summary of that file.
What Determines Your Credit Score
Credit scores are influenced by:
- Payment history (~35%) – Making consistent, on‑time payments is the most important factor.
- Credit utilization (~30%) – Using a moderate portion of your available credit is healthier than maxing out accounts.
- Length of credit history (~15%) – The longer you’ve managed credit, the better.
- Credit mix (~10%) – A combination of credit cards and loans can strengthen your score.
- New credit (~10%) – Multiple recent applications can temporarily lower your score.
How Credit Unions (Like AUCU) Come Into Play
When you open a loan or credit account with a credit union, they may report your account activity to the major credit bureaus. That information becomes part of your credit history and influences your score.
Responsible use, on‑time payments and manageable balances help build positive credit. Members of Auburn University Credit Union can benefit by using our credit products wisely and leaning on AU Credit Union for financial guidance.
Common Credit Score Myths (and Realities)
- Myth: Checking your own credit score hurts your score.
Reality: Soft inquiries do not affect your credit. - Myth: A higher income means a higher score.
Reality: Income is not included in credit scoring. - Myth: You must carry a balance to build credit.
Reality: Paying off your balance is healthier and does not hurt your score. - Myth: Closing unused credit cards boosts your score.
Reality: It may reduce your available credit and shorten your credit history. - Myth: Bad credit is permanent.
Reality: With consistent habits, scores can improve over time.
Practical Tips to Build or Repair Credit
- Make all payments on time.
- Keep credit card balances low.
- Use credit responsibly to build a history.
- Limit new credit applications.
- Maintain a healthy credit mix.
- Monitor your credit reports regularly.
- Be patient. Improvement takes time.
A Note for AUCU Members
As an Auburn University Credit Union member, you have access to financial tools, education, and loan products that can support your credit-building journey. Whether you're starting out or rebuilding, AUCU is here to help you build smarter credit habits.
Frequently Asked Questions About Credit Scores & Reports
1. How often should I check my credit report?
At least once a year. More often before major purchases. Checking your own report doesn’t hurt your score.
2. What is considered a “good” credit score?
- Excellent: 760+
- Good: 700–759
- Fair: 640–699
- Poor: below 640
3. Will paying off a loan early improve my credit score?
It may help your debt levels but could close an account, affecting account age.
4. Why did my credit score drop after applying for new credit?
Hard inquiries cause small, temporary drops.
5. What’s the fastest way to improve my credit score?
Pay on time, reduce balances, avoid new credit, and dispute report errors.
6. Can I build credit if I’ve never had credit before?
Yes — through secured cards, credit‑builder loans, or becoming an authorized user.
7. How long do negative marks stay on my report?
Generally seven years; bankruptcies up to 10.
8. Do credit unions report differently than banks?
Reporting is similar, but credit unions offer more personalized support.
9. Does opening a new credit card help or hurt?
Both — inquiries may lower your score, but increased credit limits may help utilization.
10. Can Auburn University Credit Union help me build or repair credit?
Yes — AUCU offers tools, education, and credit‑building resources for members.
AUCU is an equal opportunity lender and federally insured by the NCUA. NMLS# 530633