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Why Credit Scores Are Not That Scary

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Let’s face it – today’s financial landscape is a challenge for everyone. From everyday expenses to saving for a big purchase like a car or home, knowing how to plan and navigate finances can feel overwhelming. While many people use simple tools like savings accounts to plan for the future, it won’t make any difference when it comes to large purchases if you don’t know your credit score.

Credit scores are used by all major financial institutions to determine how much you can borrow, and how much it will cost you. The better the credit score, the more you can borrow and the less interest you’ll pay. A bad credit score? That’s a whole other story.

Not knowing or not working on your credit score can mean higher than average interest rates with lower borrowing power. Want that new car you’ve been dreaming of, or do you think you’re ready to buy a home? Without knowing or having a strong credit score it probably won’t happen, or you’ll pay more in the end.

F&M Bank can help break down what makes up a credit score, how to improve, tips for staying on track, and help make the idea of knowing your credit score less scary. Since the 1900s, F&M Bank has been serving the residents of the greater Shenandoah Vally with small town customer services and robust digital banking.

Now get ready to take some notes, create your action plan to check and improve your score, and feel secure when you apply for an F&M Bank credit card or other financial products.

Understanding the Credit Card Application Process

Before we dive into credit scores, ways to improve, and the importance of a budget, let’s start with understanding the application process for an F&M Bank credit card

There are 5 basic steps:

  • Understanding Your Credit Score – basic information on what makes up a credit score and how it impacts your approval.
  • Determine the Type of Credit Card You Need – consider what type of benefit you are looking for in a credit card
  • Research Credit Card Options – View side-by-side comparison of F&M Bank’s credit card options
  • Check Eligibility Requirements – Connect with an F&M Bank customer service representative to review all eligibility requirements.
  • Submit Your Credit Card Application – You can complete your application online or visit one of our locations if you want help with the application process.
  • What to Expect After Submitting Your Application – depending on the type of card you are applying for, it may take a few business days for a decision. Your F&M Bank customer service representative can help answer any questions.

What’s In a Number?

No other 3-digits in the world hold as much power as your credit score. This determines if you meet the minimum requirements for a credit card or home loan or auto loan.  impacts on the difference between a great interest rate vs. a high one. While the average credit score is 620, as many as 24% of people either don’t know their credit score or have not checked in the last 12 months.

But checking your credit score is easier than you think. Many banks offer credit services, along with these great resources that can not only help you know where you stand, but can offer tips and programs to improve your score.

Don’t Panic if Your Score is Below Average

Just because your credit score is below the average 620, you don’t have to panic. In fact, 20% of people either have a Poor or Average credit score. Knowing what steps you can take to improve in both the short and long term can help build better habits that can lead to a sustained good credit score.

The best way to start improving your credit score is to follow these tips:

Pay Bills On Time

Consistently paying regular bills like utilities, rent or mortgage, and even your cell or internet has a positive impact on your credit score. The best way to ensure you don’t get a late payment on your credit report is to pay bills on time, consistently, and using features like auto-pay can help you stay on track.

Review Credit Report for Errors

Many people simply look at their credit score but don’t take the time to thoroughly review, which can be a bad thing. Roughly 27% of credit reports actually have errors that should be addressed immediately. This can be anything from personal information, incorrect reporting of missed payments, or accounts that are marked ‘closed’ but are in fact still active. The Consumer Financial Protection Bureau has a great resource that outlines the most common errors and action you can take to get them fixed.

Keep a Healthy Credit Utilization

Even if you have only one credit card or merchant card, ensuring you’re not relying on rotating credit can improve your score. You want to aim for using about 30% of your available credit at all times; going above or maxing out account can actually lower your score. This is because financial institutions are looking for borrowers that use credit wisely, rather than consistently relying on available credit.

It will take some hard work and time but give yourself about 3 to 5 months and you will see results. F&M Bank also has a great resource to help you clean up your credit score to get ready to apply for a credit card or loan.

Create a Budget  

While this may seem like an obvious tip for getting control of your finances, many people don’t spend enough time creating and sticking to a budget. Roughly 27% of people either don’t use a budget or don’t feel it is needed. But understanding your finance can open up opportunities to keep a healthy credit score, get better rates on loans, and save for the future.

The most common budget framework is the 50%/30%/20% rule. Here is what it means:

  • 50% – goes to daily living expenses like rent or mortgage, utility bills, groceries, credit cards, really anything that is needed for day-to-day living.
  • 30% – goes to things that you want like saving for vacation, a new car, having a night on the town, and other fun but not needed expenses
  • 20% – goes to savings and financial goals like retirement and building more financial security

Once you create a budget that works for you, use the tools in F&M Bank’s Online and Mobile Banking App to monitor and track your daily expenses, pay bills, and set account alerts. Just like working on your credit score, sticking to a budget takes time and practice but pays off in the end.

Appy for an F&M Bank Credit Card

Now that you know how to check and improve your credit score, the credit card application process, and create a budget, it’s time to unlock for potential with an F&M Bank credit card. Apply online or visit one of our locations today and learn now more than 100 years of financial services in the greater Shenandoah Vally makes F&M Bank your trusted banking partner.