Financial Fitness - Understanding your Credit Score

Data released by a credit scoring website says here in Hawaiʻi, per person, credit card debt comes in at more than $8,400, and that ranks our state as the 2nd highest in the nation.

Alan Akina continues to help us to understand credit in this morning's financial fitness segment.

Good morning, everyone. Hopefully you were able to download the free credit report from the website annualcreditreport.com. Now, it's best to review it for any mistakes and try to correct them right away. Now today, let's talk about your credit score. What is a credit score? Well, the credit agencies say it's a complex set of mathematical algorithms. Exactly. So basically, folks, it's a financial grade that you and I get from the 3 credit agencies. The grade is based on our past financial behavior. Now the major factors that contribute to your credit score are payment history, 35%, Amount owed, 30%. Length of credit history, 15%. New credit, 10%. And types of credit used, 10%. The most important ones are how much you owe and do you pay them on time. Now banks and lenders use this number grade to determine how much of a risk we would be if they loan money to us. Generally, the higher your credit score, the less risk you are, and you should qualify for the lowest interest rates. Now my clients and I have found that creditkarma.com to be very, very helpful in getting a free credit score and useful credit information. All of our tips can be found at khontu.com. For Wake Up Today, I'm Alan Akina. See you next week.