5 Cs of good credit*A strong credit profile can help you qualify for credit at the lowest rates possible.

Yet, consumers often wait until they need credit to think about their credit situation. In fact, a recent National Foundation for Credit Counseling survey showed that 62 percent of respondents had not reviewed their report in the past year.

So how can consumers learn how strong their credit is – and how to improve it? In honor of Get Smart About Credit month, Wells Fargo is offering tips and tools to help consumers take charge of their credit:

Five Steps to Strong Credit

Taking control of your finances can help you manage your money and build a stronger credit history.

1. Check your credit Report: Once a year, consumers can request a free credit report from each of the  three major credit reporting agencies – Equifax, Experian and Transunion –  at AnnualCreditReport.com  or call 1-877-322-8228. Review the reports carefully and correct any  errors.

2. Understand the factors that affect your credit: Your credit score gives      lenders a snapshot of your credit risk. By understanding what impacts your      score, you may be able to improve it.

3. Raise your credit score:  Managing your credit responsibly over time is one of the best ways to      improve your credit score. Five key criteria are generally used to      calculate a consumer’s credit score:

  • Payment History: information  about whether you’ve made on-time payments has the most impact on your  score.
  • Credit Accounts: A balanced mix of different types of credit can help improve your score.
  • Credit Usage: Owing a lot or being near your credit limit on multiple accounts negatively impacts your score.
  • Length of Credit History:  Reviewers check to see if you can responsibly manage credit accounts over time.
  • Credit Applications: Opening  multiple new credit accounts may represent a greater risk for lenders.

4. Create and monitor your budget:      A budget gives you more control over your finances and helps you eliminate      unnecessary expenses.

5. Know what lenders look for. When consumers apply for a loan, lenders assess their credit risk based on a number of factors, often called the Five Cs of Credit:

    • Credit history. Have you  established credit and is your credit score high enough to qualify you?
    • Capacity. Is your income  sufficient?
    • Collateral. Does the  collateral you’re borrowing against have enough value?
    • Capital. Do you have assets  set aside as another source for repayment?
    • Conditions. Does the current  economy or purpose for the credit make it a risk?

Wells Fargo offers a variety of free tools designed to help individuals at any life stage learn ways to manage their finances more responsibly. For more information and resources about how to use credit sensibly to achieve financial goals, visit http://www.wellsfargo.com/creditsmart.

credit score infographic


C. Nicole Pierce
Account Executive
Flowers Communications Group