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Extra Credit: Do you know your credit score?

Credit History Credit Score Credit
Written by Tammy G. Bruzon · 03 August 2018

People who check their credit score regularly are more likely to understand how scoring works than those who don’t. The impact can be significant. Understanding how credit scores work translates into knowing how a credit score can impact interest rates and ultimately how much it costs individuals to borrow money.

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Do you know your credit score?
By America Saves

Credit reports and credit scores
By Northern New Jersey Saves / United Way of Northern New Jersey

Free credit freezes are coming soon
By Federal Trade Commission

Do you know your credit score?

People who check their credit score regularly are more likely to understand how scoring works than those who don’t, according to a new survey released by the Consumer Federation of America and VantageScore. The survey also revealed that the number of people who have checked their credit score recently has increased.

Whether you’re intending to use your credit soon or simply looking for ways to improve it for the future, here are three things you should know about your credit score:

  1. Missed payments can lower your score.

    Did you know that if you miss a payment on your credit card, car note, or student loans your credit score can be negatively affected? Payment history is one of the major components of your credit score. When you pay your bills on time each month, your credit score will gradually start to increase. If you miss payments or your bill is sent to a collections agency, your score will decrease.

    If you frequently miss payments, your score could drop significantly, and it will take time to raise it again. If you can’t afford to pay your balance in full, at least pay the minimum amount on time.
  2. Keeping a high credit card balance lowers your score.

    Believe it or not, carrying a high credit card balance month to month can harm your credit score. Credit utilization is the percent of your credit limit that you use each month, and your credit utilization ratio is a key component of your credit score. A good rule of thumb is to keep your credit card balance under 30 percent of your overall credit card limit. For example, if you have two credit cards that each have a limit of $500, your total available credit is $1,000. In this instance, you will want to keep your balance below $300, or 30 percent, of your total limit. 

    A large credit card balance can also feel overwhelming to pay down. When you aim for a low balance and pay your bill in full each month, you get a fresh start each billing cycle.
  3. Checking your credit report will not change your score.

    Annual check-ups on your credit reports will make sure they are error-free and won’t impact your credit score. This can be done for free each year at www.annualcreditreport.com or by calling 800-322-8228. 

    Additionally, many financial institutions will let you check your credit score online for free. When you regularly monitor your score, you can see how your financial decisions are impacting your credit potential. Some tools may also show you how you measure up in the major credit scoring criteria, including payment history, utilization, and age of credit history. 

Want to learn more about credit and your score? Take the short quiz offered by CFA and VantageScore online to test your knowledge at CreditScoreQuiz.org

Darlene Aderoju works for America Saves, managed by the nonprofit Consumer Federation of America (CFA), which seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. Learn more at AmericaSaves.org.

 

Credit reports and credit scores

A credit report looks at some of your bill paying history, public record information, how often you have applied for credit, and how you have used credit. It shows how much credit you have, how much of your available credit you are using, whether you have made your payments on time, and whether debt collectors have reported that they are attempting to collect debt that you owe.

Credit scores are calculated using the information in your credit report, and many lenders use them to decide how much money they can lend you and how much interest to charge.

Why do credit reports and scores matter?

A good credit history can help you:

  • Get and keep a job.
  • Get and keep a security clearance for a job, including a military position.
  • Get an apartment.
  • Get insurance coverage.
  • Get lower deposits on utilities and better terms on cell phone purchase plans.
  • Get a credit card.
  • Get a better credit score.

If any of these things are important to you, improving your credit report can help you get them.  Scores are calculated based on the information in the report – so at least once a year, take the time to make sure the information in your report is accurate. You can get one free copy of your report every 12 months at www.annualcreditreport.com

What are credit scores and how are they calculated?

Credit scores are numbers created by mathematical formulas that use key pieces of your credit history to calculate your score at a moment in time - like a photograph.  FICO and VantageScore are two of the most commonly used credit scores. These scores typically range from 300 to 850. A FICO score above 700 is considered good by most businesses, and the scores considered the best are 750 and higher.

While there are certain similarities and many differences in the credit score formulas, here is information that FICO makes available to the public on what goes into its scores:

  • Payment History: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Types of credit used: 10% 

Payment history tracks whether you are paying your bills on time and as agreed. Paying bills late, not paying bills at all, and having bills that go to collections will cause your scores to drop. The impact on a score from a single late or missed payment decreases over time. Paying your bills on time can help increase your score. Debts that go to collections and to judgment will cause it to fall.

To get and keep a good credit score:

  • Pay all your loans and bills on time. A good way to ensure this happens is to have money put aside in a savings account in case a bill is higher than expected one month or you had an emergency that used money you had planned to use for bill paying.  Saving a portion of your tax refund and having some funds automatically deposited from each paycheck into a savings account are easy ways to make sure you always have sufficient funds to make timely payments.
  • Make sure information in your credit report is correct. Check your credit report annually and take steps to correct mistakes. 
  • If you currently have access to credit, don’t use too much of the credit that is available to you.

For more information on credit scores and reports, visit: www.consumerfinance.gov/ask-cfpb/category-credit-reporting/

Lynn Weckworth works for United Way of Northern New Jersey, a nonprofit coordinator of Northern NJ Saves. Some of the content in this blog has been excerpted from the Consumer Financial Protection Bureau’s Your Money Your Goals

 

Free credit freezes are coming soon

By Lisa Weintraub Schifferle, Attorney, Federal Trade Commission (FTC), Division of Consumer & Business Education, as published on militaryconsumer.gov

Looking for stronger ways to protect your credit? Thanks to a new federal law, soon you can get free credit freezes and year-long fraud alerts. Here’s what to look forward to when the law takes effect on September 21: 

Free credit freezes

What is it? A credit freeze restricts access to your credit file, making it harder for identity thieves to open new accounts in your name. Usually, you get a PIN to use each time you want to freeze and unfreeze your account to apply for new credit.

What’s new? Currently, credit freezes may involve fees, based on state law. Starting this fall, it will be free to freeze and unfreeze your credit file throughout the country. 

Free child credit freezes

What is it? A child credit freeze allows you to freeze a child’s credit file until the child is old enough to use credit.

What’s new? Currently, some state laws allow you to freeze a child’s credit file. Starting September 21, no matter where you live, you’ll be able to get a free credit freeze for children under age 16.

Year-long fraud alerts

What is it? A fraud alert will tell any business that runs your credit that they should check with you before opening a new account.

What’s new? Currently, fraud alerts last 90 days. Starting this fall, an initial fraud alert will last for one year. It will still be free and identity theft victims can still get an extended fraud alert for seven years.

The new law has a long name – Economic Growth, Regulatory Relief, and Consumer Protection Act – but the outcome is simple. When the law takes effect in September, Equifax, Experian, and TransUnion must each set up a webpage for requesting fraud alerts and credit freezes. The FTC will also post links to those web pages on IdentityTheft.gov.

And if you’re in the military, there’s more. Within a year, credit reporting agencies must offer free electronic credit monitoring to all active duty military. 

If you want to stay tuned on this law and get other tips, sign up for the FTC's Consumer Information Updates.

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Social Media Content

Share the following messages with your followers. 

#SavingsTipTuesday

Keep your balance low. Maintaining low credit utilization is a sign of good credit management and shows lenders you are a good credit risk. http://bit.ly/2AyDAS8 v/ @AmericaSaves #SavingsTipTuesday 

Use your credit wisely! Avoid applying for multiple accounts in a short period of time. Taking on large amounts of debt in a short time is a sign of high credit risk. >> http://bit.ly/2fw2jgh v/ @AmericaSaves #SavingsTipTuesday 

A study by @FederalReserve says that credit can affect your relationship. Check out this info from @FINRAFoundation about how credit can affect your love life. http://bit.ly/2BkIXms v/ @AmericaSaves #SavingsTipTuesday 

#WednesdayWisdom

You can get out of debt and save money by managing your debt and credit responsibly. http://bit.ly/2lQia9y v/ @AmericaSaves #WednesdayWisdom 

Never miss a credit payment! According to @USAAEF, 35 percent of your FICO credit score is based on your payment history. >> https://bit.ly/2zVezAl @AmericaSaves #WednesdayWisdom 

If you want to start investing, check out these tips from The Office of Investor Education and Advocacy. https://bit.ly/2sVKJp6 v/ @MilitarySaves cc: @SEC_Investor_Ed #WednesdayWisdom 

#SavingsFactFriday

A high #credit score can make it easier to get an apartment, utilities, or even a job. http://bit.ly/2AwCKoJ v/ @AmericaSaves #SavingsFactFriday

Carrying a large balance on your credit cards from month to month can lower your credit score. v/ @AmericaSaves #SavingsFactFriday

Additional Posts 

Let @AmericaSaves help you stay committed to your savings goal! Take the pledge today: http://bit.ly/2dFhJf9

Want your free #credit report from the three main credit bureaus? All you have to do is ask! http://bit.ly/2AwBTo8 @AmericaSaves

Have a savings tip or story that others might benefit from? Share it w/ @AmericaSaves and you could win $25: http://bit.ly/2oiP4iv

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Helpful Resources

From America Saves

Debt and Credit
Importance of Credit History

Blog Articles

Resources and Research

Annual Credit Report (once-a-year), AnnualCreditReport.com or (877) 322-8228

Better Money Habits, Building credit and keeping yours healthy

Consumer Financial Protection Bureau (CFPB), Credit reports and scores

CreditScoreQuiz.org & CuestionarioparaelPuntajedeCredito.org, this is an informational tool developed by the Consumer Federation of America (CFA) and VantageScore Solutions.

Credit Reporting Bureaus

FINRA Investor Education Foundation:

Hands on Banking, Wells Fargo, All about credit

Money Under 30, How Credit Works: Understand The Credit History Reporting System

myFICO

The USAA Education Foundation:

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Financial Foresight During Holiday Fun

Budgeting Holiday Family Savings
Written by Tammy G. Bruzon · 03 August 2018

The holidays are a wonderful time to relax, unwind, and enjoy the company of loved ones. It’s easy to get carried away with spending, but financial responsibilities will continue after the holidays are over. That’s why it’s important to keep savings goals at the forefront during this time of year.

Please share the blogs, social media content, graphics, and resources with your constituents, partners, and the general public. Encourage others to receive Partner Resource Packets from America Saves in the future by signing up to receive news and updates from America Saves

In This Packet:

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Social Media Content

Helpful Resources

Join Our List 


Blog Content

For use in communications that directly reach your constituents. We encourage you to use this content as guest posts or rewrite America Saves content as your own.

5 Holiday Mistakes That Could Cost You
By America Saves

Credit reports and credit scores
By Connecticut Saves

5 Holiday Mistakes That Could Cost You

The holidays are just around the corner, which means it’s time to enjoy vacations, catch up with family and old friends, and eat great food. While the holidays are about quality time and making memories, it’s easy to get caught up with spending money. Here are five holiday mistakes to avoid this year so you can enjoy the season with your finances intact:

  1. You’re shopping without a budget or list.

It’s incredibly kind to get each of your relatives, colleagues, and in-laws thoughtful presents and cards to show them your appreciation, but your wallet might be crying for help after your first few purchases. One of the biggest financial mistakes you can make during the holidays is shopping without a spending plan.

When you’re shopping for loved ones, you’re imagining how happy they’ll be when they receive your gift. But remember, financial responsibilities don’t go on vacation during the holidays. Create a budget for your holiday spending. Once you know how much you can afford to spend, create a list that fits your budget.

This way, you’ll be able to purchase the items you plan for and know for sure that you didn’t bust your budget. Here’s a free holiday budget printable to get you started.

  1. You’re volunteering your home, food, and car to everyone.

If you’re the person that always offers food, transportation, and lodging to everyone, you might want to try a new approach this year. It’s thoughtful to go the extra mile during the holidays, but don’t stretch yourself or your pockets too thin.

Consider splitting the responsibilities with your friends and family. You might not think you’re overspending by being so accommodating, but the more people there are in your home, the more likely you are to receive a high utility bill at the end of the month. You’ll also be surprised at how many trips you might have to make to the grocery store to restock on food, drinks, and toiletries.

You can suggest hosting a potluck style gathering this year. With a potluck, each guest is responsible for bringing at least one dish, beverage, or party supply. At a minimum, you’ll save money on food and drinks. If you need napkins or disposable utensils and plates, you can make one guest responsible for those items as well.

If you have a ton of relatives who need to be picked up from the airport or train station, see if you can rope in other family members to help with pick-ups and drop-offs. This will help you save on gas, time, and energy.

Splitting responsibilities will help you enjoy the holidays without being completely stressed out.

  1. You’re shopping too late.

So you’ve created your list and a tight budget, that’s great! Don’t wait until the last minute to actually make your purchases. By then, sales may be over and supplies will be limited.

Start your shopping early so you can snag deals while they’re still available. When you have ample time to cross items off your list, you’ll have time to compare prices and bargain hunt. Some stores offer price matching, so keep that in mind as you start shopping and placing your online orders.

Time is of the essence. Shopping early will give you time to figure out what you actually need and get those items at the best price. When you wait until the last minute, you’re much more likely to bust your budget because you’ll just be rushing to cross people off your list instead of specific items that fall within your budget. Here are some tips to help you save while you shop. 

  1. You’re relying on your credit cards.

Do your best NOT to rely on your credit cards during the holidays. If you can’t afford to buy it now, don’t create a bill for yourself later. Once the holidays are over, you’ll be faced with a potential mountain of debt that you’ve built.

The holidays are a great time to enjoy the company of your loved ones, but you shouldn’t feel like the only way to show your love is through expensive presents and festive decor. Enjoy the holidays in a way that doesn’t destroy your finances. This year, make it a goal to spend quality time. 

If an unplanned expense does occur during the holidays and you have to use your credit, here are some tips for using your credit card.

  1. You’re trying to keep up with the Joneses.

Don’t make the holidays a competition about who can wear the most expensive clothes, buy the flashiest gifts, or serve the swankiest dinner. Make the holidays about creating lasting memories and enjoying time with your loved ones, or simply yourself. 

Darlene Aderoju works for America Saves, managed by the nonprofit Consumer Federation of America (CFA), which seeks to motivate, encourage, and support Americans to save money, reduce debt, and build wealth. Learn more at AmericaSaves.org.

 

Gift Giving on a Budget

As the holiday season approaches, do you find yourself looking forward to the festivities, but concerned about the impact on your wallet? You are not alone. By doing some planning now, you can simplify your gift giving. Here are ten ways you can enjoy this special time of year and keep spending in check:

  1. Food. Consumable items are very popular during the holidays. The recipients may enjoy the product themselves or share it with others when entertaining. Consider special breads, beverages, fruit baskets, snack items, regional favorites, and gourmet coffees and teas.
  2. Go green. Find locally grown plants, flowers, and dried wreaths. Another option might be to purchase colorful washable napkins, placemats, dishcloths, reusable bags, and lunch bags with individual containers for sandwiches and snacks.
  3. Set limits. This could be done by establishing a dollar amount per gift, completing your shopping in only one or two trips, purchasing one gift per family, or committing to doing all your shopping locally.
  4. Made by you. Make your own food specialty. Knit a scarf. Hand craft an item. Create an annual holiday ornament. Give a framed photo.
  5. Hobby-related gift or gift certificates. Consider the recipient’s hobbies and interests. Are there gardeners, chefs, woodworkers, knitters, readers and gamers on your list? Gift accordingly by providing them with the tools or materials to do what they enjoy.
  6. Agree on a gift challenge. Discuss this idea well in advance of the holidays with those whom you regularly exchange gifts, but make it fun. You might suggest handmade items only, gifts under $10, one gift for a whole family, limit shopping to consignment or thrift store finds or pick a theme such as useful or consumable items only.
  7. Purchase the same type of gift for everyone. It could be umbrellas, scarfs, journals, board games, puzzles, nice pens, throws, books, or flashlights and batteries.
  8. Recipe Book. You could make up a recipe book with family favorites or provide a blank recipe book for the great cooks in your life.
  9. Coupons for your services. Offer your time and abilities. You can create coupons related to your skills. Perhaps it is cooking a favorite meal, snow shoveling, home repair or an oil change, mending, guitar lessons and so on.
  10. Create a special memory. Look in newspapers or online for special events this holiday that are free or low cost. Instead of purchasing gifts, make a date with your family and friends to enjoy an event together and get together for desserts and coffee.

Most importantly: enjoy your holidays!

Faye Griffiths-Smith works for UConn Extension, a nonprofit coordinator of Connecticut Saves.

 

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Social Media Content

Share the following messages with your followers. 

#SavingsTipTuesday

Keep your savings goals in mind while you shop for holiday gifts. #SavingsTipTuesday @AmericaSaves

You can save money and be thoughtful by giving your loved ones handmade presents. #SavingsTipTuesday @AmericaSaves

 

#WednesdayWisdom

Holidays should be about spending quality time instead of spending lots of money and building debt for the future #WednesdayWisdom @AmericaSaves

It’s kind to offer food, presents, and accommodations to loved ones during the holidays, but don’t spread yourself or your pockets too thin. #WednesdayWisdom @AmericaSaves

 

#SavingsFactFriday

Each time you swipe your credit card for the holidays, you’re creating a bill for yourself later. Follow a budget so you won’t overspend. #SavingsFactFriday @AmericaSaves

Making a list and checking it twice before shopping for the holidays is a great way to track your spending. #SavingsFactFriday @AmericaSaves

 

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Helpful Resources

From America Saves

Creating a budget

Saving on a Tight Budget

Blog Articles

Resources and Research

Better Money Habits

News

Research

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Join Our List

Subscribe to America Saves partner updates to be the first to receive new partner packets, the latest savings news and research, and information about America Saves Week. 

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Take the Pledge

Written by Madeline Daniels · 09 May 2018

Tip of the Day

  • Written by Administrator2 | January 14, 2014

    To minimize interest charges, limit credit card purchases to those you can pay off in full at the end of the month. In the end you'll have more for emergency savings. http://ow.ly/FJyVP

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Starting and Continuing a Personal Finance Journey

Written by Sara Cooper | December 23, 2013

When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer Business Institute during her sophomore year of high school, she began her personal finance journey. The program required participants to open a savings account.

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Learning to Save

Written by Katie Bryan | October 28, 2013

Kisha Barns’s financial situation was undisciplined, unrestricted, and impulsive before she came into contact with her local America Saves campaign, Charlotte Saves.

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Another Dream Realized

Written by Tammy G. Bruzon | November 7, 2014

Mary Brown was already a disciplined individual when she came to Wisconsin Saves coordinator Wisconsin Women’s Business Initiative Corporation (WWBIC) in last summer. She had successfully completed her bachelor’s degree with the assistance of her husband and son, and was now ready to tackle her next big dream – homeownership.

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