The Kent Patch is a great local and online news source. They were kind enough to post our Money Savings Expo on their site to let even more people know about how great it is going to be!
Have you thought about ways to improve your finances lately? Running out of time to file your taxes? Let $.A.F.E. help! Come to our Money Savings Expo on April 2nd at the new Ravenna High School. It is located at 6589 N. Chestnut St., Ravennaa, OH.
The Ohio Benefit Bank will be offering free tax filing on a first come, first serve basis. We also will be giving away 2 $25 Walmart gift cards through our raffle. All you need to do is attend our event, recieve your one free rafffle ticket at the door and be present for the 12:30pm and 4pm raffles. Why wouldn’t you come?!
$.A.F.E. will be offering all four of our financial classes throughout the day. We will have many local exhibitors attending the event and offering their own servies to the community. There will also be hands-on demonstrators for ways to save money practically such as How to Green Your Home by Home Depot, learn how to can and preserve food at home, sewing tricks and techniques, and how to make your own cleaning supplies to name a few. Come and join us for a day of fun, learning, and helping yourself save and spend money wisely!
Link to Kent Patch event page: http://kent.patch.com/events/money-savings-expo
Credit card utilization is one of the most important credit score-related topics, and also one that’s often misunderstood. This complicated equation, also called revolving utilization, is an incredibly important factor in your FICO credit scores. Grab your credit reports and a calculator as I walk you through it.
Credit card utilization is the relationship between the balances on your credit cards and the credit limits on all of your open credit card accounts. It is expressed as a percentage and is calculated a number of ways. It’s so important that it is a key factor in the “Debt” category of your FICO credit score. The debt category is worth 30% of your FICO score points and while the credit card utilization percentage isn’t alone worth all 30% (that’s a myth), it’s certainly key to earning and maintaining great scores.
Line Item Utilization – Calculate this first
The first way to calculate your credit card utilization is by doing so for each one of your cards. So, go grab each and every one of your credit cards, retail store cards and gasoline cards and make a stack. As long as they have revolving terms, meaning you don’t have to pay them in full each month, they need to be in your pile.
Each of those cards has a credit limit, which is the highest amount that can be charged on that card. You can find the limit by looking at a statement or by calling the credit card issuer. Or, you can look at your credit report. Getting the limits from your credit reports is the most important method (because that’s how credit scores calculate utilization) but they aren’t 100% accurate 100% of the time.
For every card that has a balance (meaning you got a bill this month), divide that balance by the credit limit. Then multiply that figure by 100 and you’ll get the utilization percentage on that card. So, if you have a $50 balance and a $500 credit limit you’ll get 10%. Your goal is to have the lowest possible percentages.
Now, you’re going to be tempted to cheat. Just because you already did or plan to pay the balance in full doesn’t mean your percentage is 0. Credit scores can’t tell what your intentions are and as long as the balance is showing up on your credit report then you will have a utilization percentage greater than 0.
NOTE: Sometimes credit limits don’t show up on credit reports. This is what I was referring to earlier about it not being accurate 100% of the time. If your report has missing credit limits on open credit card accounts then you’re not out of the woods. Look for the field called “High Balance” and use that figure in lieu of the missing credit limit. The high balance is the historical highest balance on that account.
Aggregate Utilization – Calculate this next
The method for calculating aggregate utilization is exactly the same as it was for line item utilization except for one difference. You’ll need to add together all of the balances on your credit cards and all of the credit limits as well. Then you’ll divide the aggregate balance by the aggregate limit.
Now, it’s important you do this right. Just because you have a credit card that doesn’t have a balance doesn’t mean it won’t count here. You’ll still include the credit limit, which will help your percentage. This is the number one reason you don’t want to close credit card accounts even if you don’t use (or want) the card any longer. The unused limit helps your utilization percentage.
What’s a Good Percentage?
According to FICO, the consumers who have the highest scores in the country (760 and above) have an aggregate utilization of 7%. That’s about as clean of an answer you’re ever going to get to a FICO score question. Of course that doesn’t prevent people from giving answers that are all over the place. I’ve seen 30%, I’ve seen 50% and I’ve even seen 70%.
The way the scores are designed rewards consumers for having a lower rather than higher utilization. So, generally, the lower the number the more points you’re going to earn in your score. 30% is better than 50%, but not as good as 7%. And I’m not sure where in the world someone got 70%, that’s just terrible.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit.
A great article detailing why and how to build and manage credit. It’s a fantastic resource for anyone at any age but especially useful for ages 30 and under.
Everyone tells you that these are the best years of your life. But the rest of your life can be even better if you start building credit now and working on your debt planning. Next time you try to rent an apartment, ask for a loan, or apply for a job, you’d do well to come armed with the same information that your creditors already know about you.
Here are the raw stats:
Every business reports your financial management activities to the three major credit bureaus—Experian, TransUnion, Equifax. Your financial activities dictate your FICO (Fair Isaac Corporation) score, ranging from 300 (worst) to 850 (best), and this is what lenders, landlords and employers use to determine your credit risk. The lower the score the more likely you’ll be considered a risk. It also dictates interest rates. A low score can mean thousands more in interest payments, as you can see in this table:
Here’s how FICO scores affect rates based on a 3-year auto loan for $15,000.*
|FICO Score||APR||Monthly Payment|
Your credit history can haunt you for the rest of your life so it’s a good idea to follow this easy three-step-plan to build, maintain and (if you must) repair your credit.
#1 Build Your Credit
Open Checking/Savings Accounts: You can open an account for as little as $10 at some banks. The ability to maintain your accounts will show lenders that you can reliably handle money. Opening an account is particularly beneficial for those who haven’t already established credit. Bounced checks mess up your credit report, so use that check-writing feature wisely!
Apply for a credit card: Part of your debt planning should include determining what type of credit cards you should sign up for. Get a credit card with low interest rates (not just intro rates), no annual fees, and a generous grace period. Try not to carry a balance so you don’t end up paying interest. Retailer cards are easy to get but have high interest and worse penalties, so only get one if you’re able to pay in full each month. Secured cards require a deposit, which becomes your limit. Be careful about missed payments as they come out of that deposit. Be aware that secured cards also have high interest rates.
Don’t get lots of credit at once: When you get credit, it goes on your report so if you open many accounts at once, they drag down scores and worry lenders. Even applications stay on your report for two years. If you need more than one card, wait six months before opening another. Wise financial management practices dictate that you use your first card responsibly, especially during the first six months; doing so will allow you to get better rates on future cards.
Piggyback on someone’s credit: If family members with established credit add you to their credit cards, your credit will reflect upon theirs. Conversely, so-so or bad credit from your family members may be something you’ll inherit as well, if you sign on as additional members and users of their credit cards. Also, if they co-sign a loan with you and you default, you’ll be impacting their credit, so be careful.
#2 Maintain Your Credit
Get Your Credit Report: Use annualcreditreport.com to get all three reports once a year for free. If you find mistakes, immediately contact the credit agencies since discrepancies stay until you take care of them. If your report is bad due to debt, start working on repairing your report. Avoid companies that offer to fix your credit: many are reputed to be rip-offs and have been reported to use illegal practices. The only way to improve credit is to pay debts and dispute false charges.
Get Your Credit Score: Although you can receive credit reports for free, it’s not typically the case with credit scores. Credit scores cost $15.95 at annualcreditreport.com or myfico.com. Cheaper sites calculate their own scores, and are often inaccurate. Just like credit reports, you have three scores. Check all of them if you’re making a major purchase. You don’t want to get caught off guard if the lender checks one that you weren’t able to review beforehand. Recently, a new service called CreditKarma.com was launched to provide free credit scores to the public. The downside? You’ll have to supply your personal information to this new company before you’re able to review your scores.
Don’t close old accounts: Once you’ve paid off your credit card accounts, don’t close them off! Older accounts will show that you have long-lasting credit history, and this will indicate that you have financial stability. If you close your available credit, it’ll raise your debt-to-credit ratio.
#3 Repair Your Credit
Pay in full every month: If you carry a balance, you’ll pay interest. If you’re unable to pay in full, pay at least the minimum on all debts. Paying at least the minimum will improve your credit history and score, which will give you leverage for lowering your interest rates.
Pay on time: Late payments mess up your report for years. It can also raise interest rates. Any late payments you make on any one bill will affect the interest rates you have across all your credit accounts. If you have trouble remembering due dates, have Mint remind you when bills are due and set up auto-bill pay online through your bank.
Lower your debt-to-credit ratio: Your debt-to-credit-ratio is what you owe versus how much credit you have. If you owe $5,000 and have $10,000 in credit, your ratio is 50%. The lower the ratio, the better. Aim for a ratio that’s less than 30%. A quick way to lower it is to increase your credit line; but, don’t spend more just because you happen to acquire more credit.