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It’s National Credit Education Month!

It’s National Credit Education Month!

Thursday, March 14, 2024/Categories: Home Page Story

Why do we need an entire month devoted to credit education? The answer is pretty simple, but sometimes not very clear. Focusing on credit for the month just might drive home the need for great credit scores and a positive credit history, but understanding the ins and outs of credit can be daunting.

Credit 101

Understanding your credit worthiness can pay off when emergencies happen, your dream purchase becomes a reality or life presents you with choices that depend on your finances, or lack of finances. Whatever your situation, the more you know about your credit situation, the more comfortable you will feel about using credit.

Credit is a term used to describe a promise to pay for something at a later date. Borrowing secured by a purchase is a very common use of credit and one of the easiest transactions to understand – for example, you borrow money from your bank to purchase your car. If you understand your entire credit picture – history, score, current use of credit – you can be prepared when you want to make a major purchase or take that special vacation trip.

Your Credit Report

A credit report is a detailed compilation of your credit history used to forecast your financial reliability. A bank or financial institution offering to provide credit to you will want to review this in detail, and if you are applying for a new career position, your new employer might want to review this report to have an insight as to your financial picture.

Credit Bureau Reporting Agencies

There are three main credit bureaus, and it is their business to know your financial business. Credit bureaus collect data about your financial situation and provide it to lenders, insurance companies, landlords, employers, utility companies and more. They generate a credit report that is your unique report card of your financial habits.

Equifax®, Experian™ and TransUnion© are the three credit bureaus most often used, and the likely agencies your lender or credit issuer will utilize. Reports from all three could be used, or a combination of two of them. You can request free copies of your credit report at

Your Credit Score

A credit score is a three-digit number between 300 and 850 designed to represent the likelihood you will pay your bills on time. This score reflects your trustworthiness for managing money. High scores will make your borrowing easier, while low scores can lead to rejections or higher interest rates.

Scores around 700 are considered good, while those around 800 are viewed as excellent. Ratings vary slightly and different wording is often used, so be sure to check your scores on all three agencies if you are concerned.

Improve Your Score

The good news is that you can change your credit score, and it’s not rocket science. Start with a budget, pay your bills on time and set up automatic payments if possible, reduce your debt, keep balances low on your credit cards, only apply for new credit when absolutely necessary and check your credit report regularly for accuracy.

You might wonder how long this will take – be patient. Because each individual has their own unique financial situation, the time to repair a flailing score is also unique. Don’t lose sight of your goals, check your reports for reassurance and don’t give up on the good habits you’re trying to build.

Scoring Models

You will likely see the name FICO® for computing your credit score, but there are many models used today and often several versions of the FICO© scoring model. Just remember that the score can be somewhat different depending on the model used for the specific type of credit applied for.

Ultimately, ask questions of your lender or financial institution if you are uncertain of the particulars around your financial picture. Heartland Bank is a great resource, and Heartland bankers love to talk about finances, credit and loans. Stop in at any one of our 20 branch locations for all your banking needs!