Understanding Your Credit: Real Questions We Hear (and What You Should Know)

When it comes to credit, many of the same questions come up again and again. That’s because credit can feel confusing, and sometimes the answers aren’t as straightforward as they should be.

In this article, we hear from our Community Financial Education Specialist who breaks down some of the most common questions we hear from members, along with simple, practical guidance to help you better understand how credit works and what you can do to strengthen it over time.

How do I find out my credit score and check my credit report? 

Your credit score and your credit report are two different things, but they work together. Your credit report is the full record of your credit history. 

It includes:

• Your accounts (credit cards, loans, etc.)

• Your payment history

• Your balances and limits

• Any recent applications for credit

• Creditor information

Your credit score is a three-digit number based on the information in your report. The most commonly used scoring model by lenders is FICO (typically ranging from 300 to 850). You can access your credit report for free at AnnualCreditReport.com, which shows your full history (but not your score). 

Many financial institutions, including Verity, also offer tools within digital banking that allow you to check your credit score, understand what’s impacting it, and monitor changes over time. 

Why is my credit score low?

A lower score usually comes down to a few key factors:

• Missed or late payments

• High balances on your credit cards

• Limited credit history

• Applying for multiple lines of credit in a short period. 

The good news is your score is not permanent. It reflects patterns over time, which means it can improve with consistent habits like making on-time payments and managing balances carefully. 

I pay my credit card every month — why is my score still low?

This is a question that comes up often. Even if you’re paying your card in full each month, your score is based on the balance reported at a specific point in time. 

This is called credit utilization, which measures how much of your available credit you’re using.

For example, if your limit is $1,000 and your balance is $900 at the time it’s reported, you’re using 90% of your credit. That high utilization can lower your score, even if you pay it off later. 

Keeping balances lower throughout the month can help improve your score over time. 

Why didn’t my score go up after I paid off a collection? 

Paying off a collection is still a positive step. When you pay it, the balance is updated to reflect that it has been paid. 

However, the account status (such as collection or charge-off) may remain on your credit report for a period of time. The status is what may impact your score, not just the balance itself. 

Because of this, paying off a collection does not typically lead to an immediate increase in your credit score. Over time, as your overall credit activity improves, your score can begin to recover. 

Why did I get denied if my score isn’t that bad? 

Your credit score matters, but it’s only one part of the picture. 

Even if your score is considered “good”, lenders also look at:

• Whether you can realistically afford the payment

• How much debt you already have

• Your savings or available assets

• Broader factors like job stability or current economic conditions

This is often referred to as the 5 C’s of Credit, which we break down in more detail in our workshops.

I don’t have any credit — how do I start building it?

If you’re starting from scratch, there are a few ways to begin building credit:

•    Open a secured credit card
•    Use a credit-builder or share-secured loan
•    Become an authorized user on someone else’s account

At Verity, options like a secured Visa Platinum Credit Card or a share-secured personal loan can help you establish a positive credit history while building strong financial habits over time.

Here are an upcoming sessions in May:

PWR Building: Credit & The 5 C’s
When: Tuesday, May 5 | 12:00–1:00 PM PT

Where: Online via Zoom 

Ever wonder what happens after you hit “apply”? This session takes you behind the scenes so you can better understand how lending decisions are made and how to prepare for preapproval. 

You’ll learn:

• The 5 C’s of Credit and what lenders look for 
• How to review your credit report and spot errors
• What impacts your credit score and how to improve it 
• How to identify and avoid common credit traps 

Register now 

PWR (pronounced power) is built on the belief that you already have the ability to shape your financial future. These sessions are designed to meet you where you are, without judgment or strings attached.

Ready to keep going?

Explore our website to join an upcoming PWR workshop or explore more tools and resources to support your financial journey on our website. 

Disclosure: This article is for educational purposes only. Examples shown are illustrative and individual results will differ.

Credit cards available to Verity Credit Union members only. If not existing member at time of applying, applicant will be required to establish Prime Share membership account as part of credit card opening. $5 membership fee is required to join Verity. Rates current as of 12/29/25, will vary with Prime Rate as published in the Wall Street Journal, and will be determined in accordance with Verity’s loan policy and your credit profile. Platinum Visa rate range is 10.49% - 20.49% APR. For complete details, read our Credit Card Agreement and Credit Card Rates and Related Disclosures document.

Loans available to Verity Credit Union members only. If not an existing member at time applying for loan, applicant will be required to establish Prime Share membership account as part of loan funding. $5 membership fee is required to join Verity. Rates current as of 11/1/25 and are subject to change at any time. The APR you receive for personal loans and lines of credit is based on your creditworthiness, repayment schedule, and repayment method. *Lowest rate includes the following discount: 0.25% for automatic debit payments from an account at any financial institution. Share secured loans have terms up to 60 months or matching Certificate term, whichever is applicable. Rates are 3% APR + Share/Certificate rate. For the latest rate information, contact us at (206) 440-9000 or (800) 444-4589. Shared Secure Loan Repayment Example: For a $10,000 loan at 5.00% APR for 60 months, the monthly payment would be approximately $188.76, with a total of $11,325.51 in payments, including $1,325.51 in interest charges.