Austin Telco Federal Credit Union’s Vice President of Member Services, Pamela Cotton, spoke with Studio 512 about how to understand your credit score.

What is a credit score?

“A credit score tells an institution how likely you are to pay a loan back on time. Your score is based on:

  • 35% of your score is your payment history. Do you make payments on time or late?
  • 30% of your score is the amount owed. How much of your credit are you currently using?
  • 15% of your score is the length of your credit history. How long have specific accounts been used?
  • 10% of your score is your credit mix. Have you handled different types of credit responsably?
  • 10% of your score is new credit. How many new credit account have you opened in the last 12-18 months?”

Why is it important to have a good score?

“Your credit score determines your ability to get approved for new credit. It determines your interest rate (and therefore the price you pay per month) as well as your credit worthiness. Institutions will look at how many loans you already have in conjunction with your income and several other factors in order to offer you a new line of credit, and how much credit they’re willing to offer. The bottom line is that a higher score creates lower rates and can save you money!

How can you improve your credit score?

“You can improve your credit score first by being more aware of what it is. You get one free yearly check of your credit score, and we suggest using it. Make sure you pay your bills on time, keep your monthly bills low and clear up any collection accounts in your name. Don’t open a lot of new accounts at once, and be judicious before big purchases. For example, don’t get a big loan for a new car right before you intend to purchase a home.”

To learn more about the services that Austin Telco Federal Credit Union provides, go to

This segment is paid for by Austin Telco Federal Credit Union and is intended as an advertisement. Opinions expressed by the guest(s) on this program are solely those of the guest(s) and are not endorsed by this television station.