First Service Bank associates have some helpful suggestions for individuals looking to improve their credit scores.

A credit score is an important part of an individual’s financial life that can determine whether you can get credit, how good or bad the terms are, and how much it costs to borrow money (consumer.ftc.gov).

According to Darla McJunkins, a First Service Bank senior lender and senior vice president of commercial loan sales at Clinton, consumers have three credit reports compiled and maintained by three separate and competing companies called credit reporting agencies:

Equifax – based in Georgia (equifax.com).

Experian – based in California (experian.com).

TransUnion – based in Illinois and privately held (transunion.com).

These companies are essentially warehouses that store credit history and sell it to lenders. Each company maintains credit files on more than 250,000,000 consumers. “You will likely have a unique credit report and credit score at each of these companies,” Darla said. “Do not assume that your credit reports and scores are all the same.”

The three national credit bureaus have a centralized website, toll-free telephone number and mailing address so consumers can order free annual reports in one place. The only way to order free credit reports is by visiting AnnualCreditReport.com or by calling 1-877-322-8228.

Darla said it is important to review credit reports to ensure the information is correct. “The first thing you need to do is review your credit report for accuracy. If there are errors on it, then dispute those with the credit bureau,” she said, stressing the importance of making payments on time. “Whether the payment is small or big, if it is paid late, it will affect your credit.” 

Tina Jones, Government Guaranteed Loan Specialists and Loan Officer, said consumers should use a credit card responsibly to improve a credit score. “Not using credit is a mistake that most people make,” she said. “If an individual doesn’t circulate credit, it will prevent them from building a solid credit history and score. By circulating credit, I mean having a credit card and using it for bills/gas and paying it off monthly.” 

Tina added that having high balances and card overutilization will cause credit scores to go down. “Overutilization is the practice of running up balances too close to your credit card limits,” she said. “The higher that percentage, the fewer points you will earn for your credit scores.” 

Darla recommends keeping credit card balances less than 30 percent of the total allowance. “Try to use credit cards sparingly and pay them down as much as possible each month.” 

Tina’s second suggestion is to secure a small loan. “It can move you in the right direction on building credit,” she said. “For example, taking out a loan and making monthly payments on or before the due date will increase your credit score.” 

Darla said if a customer doesn’t have a credit score or is trying to improve a low one, the bank does offer a credit building loan. “This loan’s purpose is to fund a CD/savings account that will be used as collateral for the loan,” she said. “You will normally pay a minimal payment over six months to a year to establish a credit history.” 

The time needed to improve a credit score varies.

“The length of time it takes to raise your credit score depends on several different things which will be specific to the consumer’s financial history. It will vary depending on late payments, foreclosures, bankruptcy, high credit card debt, or just no activity at all,” said Darla. “If you do not have any credit, you can usually raise your score in three to 12 months, but if there are significant negative hits it can take years.  

“The main thing is to get started on making it better and continue to monitor it as you go through the process.” 

Tina pointed out that if customers are utilizing one or more of the credit examples she listed, it will raise a score faster. “Typically, three to six months is a good timeline to start seeing changes in your credit score.”

Bankruptcy and collection problems take longer to address when improving a credit score.

“Typically, bankruptcy stays on your credit report for seven to 10 years, depending on what type of bankruptcy is filed,” Tina said. “Chapter 7 bankruptcy can stay on your credit report up to 10 years from the date the bankruptcy was filed, while Chapter 13 averages seven years after the filing date.”

Foreclosures, judgments and other collections usually stay for seven years, according to Darla. 

First Service Bank associates are available and eager to help customers with questions on how to improve their credit scores.

“First of all, we readily have options to help our customers raise their credit scores,” said Tina. “We have knowledgeable employees that are available to counsel our customers and discuss options that we offer. We will listen to each individual and cater to their needs. For example, we offer bank credit cards, small short-term loans and timely solutions that help our customers build credit.” 

Darla said First Service Bank associates work hard to monitor their customers’ credit reports and discuss with them any negative areas. “If we are not able to make a loan for someone due to credit issues, we make it a point to discuss why it was denied and how they may be able to make some changes and reapply at a later time,” she said. “We offer a credit building loan for customers to help establish credit or rebuild their credit. We also offer debt consolidation loans that sometimes can help a customer manage their payments better and in turn pay them on time.”  

Consumers with questions about their credit score and how to make improvements are encouraged to contact First Service Bank.

“Whenever you are needing to build credit, there’s always a way, just begin by asking questions,” said Tina. “It’s a great first step and First Service Bank has answers.”