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Building Your Credit

Good credit is used for more than just getting a credit card. Lenders, landlords, insurers, utility companies and even employers rely on your credit score to decide whether to extend products and services to you. Without established credit, you may not be employable.

How to Establish Credit

The first thing you can do to start building a credit history is to understand what lenders are looking for.

When borrowing for the first time lenders cannot look at your credit (FICO) score or available payment history to extend credit. They must turn to "alternative" sources like:

  • Your checking and savings accounts history
  • Your employment history
  • Your residential history
  • Utilities in your name and corresponding payment history

Keeping your bank account in good standing, having a steady income and paying your rent and utilities on time all play a part in preparing you to become a qualified borrower.

What can hurt your credit score?

  • Paying late or not paying at all
  • Having an account charged off or sent to collections
  • High credit card balances or maxed out credit card limits
  • Closing credit cards with outstanding balances or with available credit
  • Closing older credit cards accounts
  • Defaulting on a loan
  • Having only credit cards or only installment loans

How Your Score is Calculated

A combination of five categories help lenders determine whether lenders will extend products and services to you.

Five Categories of Your Credit Score

35% - Payment History

Your Payment History includes number of accounts paid on time, delinquent records and negative public records or collections.

30% - Capacity
Capacity is the percent of revolving credit you have available.

15% - Length of Credit History
Your Length of Credit History can be determined by how long you have kept accounts and credit cards open and in good standing.

10% - New Credit

New Credit is the number of accounts you have recently opened and/or inquired about.


10% - Types of Credit Used
Your Types of Credit Used is the number of accounts obtained and the types of each.

To obtain a free copy of your credit report visit, and you can start tracking your credit score today.

How to Improve Your Credit Score

  • Get a copy of your credit report, review it carefully and correct any errors.
  • Make your loan payments on time.
  • Be careful when opening new accounts. Don’t open account you don’t intend to use.
  • Pay bills on time, and pay down credit card debt.
  • Never close credit cards. Your available credit will decrease.
  • Apply for an ACU of Texas Building Your Credit Loan.

Recommended links to learn more about improving your credit score.

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