How is your credit score calculated?

If you’re like most of us, you may temporarily blackout anytime someone mentions the words “credit score”. It’s a number that means so much, yet many of us barely pay it any attention. In fact, according to TransUnion, a popular credit reporting agency, nearly 70% of Americans say they have little to no understanding of credit scoring.

Unfortunately, you can’t ignore your credit score for long. If you’re carrying a low score, for example, you’ll likely pay more interest on loans, could see your insurance premiums increase and be unable to buy a home or car, land a job or rent an apartment.

Here’s a simple breakdown to help you see exactly what affects your score and where to focus your efforts to keep your score nice and high.

Credit Report Breakdown

35% Payment History

This is the FIRST thing that any lender wants to know; if you have had payments in the past and how you handled paying them. Missing a payment or making only minimum payments will have an effect on how this score is created.

30% Amounts Owed

This is calculated by all the amounts owed such as credit cards and other installment loans, i.e. car loan. Having a very small balance without missing a payment shows that you have good credit responsibility that can create a better score than having no balance at all.  Closing unused credit cards without a balance and or with good credit standing will not raise your credit score. However someone who is “maxing out” cards and using a lot of credit shows that they may have trouble making payments in the future and it will be reflected in this part of the credit score.

15% Length of Credit History

This area is taking a look into how long your credit accounts have been established (the age of your oldest account) and how long it has been since you used the credit accounts. Generally, a longer use of credit or someone who is new to credit will have a higher credit score, depending on how the rest of the report looks.

10% Types of Credit Used

This will take a look at the variety of credit (retail and credit cards, installment loans, finance accounts and mortgage loans). It will review what experience you have with these various types of loans and the total number of accounts that you have. This is checking to see your overall use with credit and looking to see if you have too many accounts for your specific “credit picture.”

10% New Credit

Someone who may open several accounts in a short period of time may show to be a higher risk individual especially if that person is new to using credit. It is recommended that you should wait at least 6 months in between opening a new credit account.

Now that you understand how credit is calculated, whenever you review your credit score you will have a better idea why a certain number is reflected or what steps you can take to raise the number. Setting up a long and healthy credit history is a great way to pave a positive future with lenders.

Source:
“What’s in My FICO Score.” FICO Credit Score Chart: How Credit Scores Are Calculated. MyFICO, n.d. Web. 26 Mar. 2014.

Your FREE Financial Checkup

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Spring Cleaning: Moving from College to Home

So, you are getting ready for the next big move. You have completed your last term paper, your last final and now you have your degree. Everything should be “easy as pie” until you realize you have to move out. What is the best way to prepare for the move home? Here are some steps you can take to make it an easier, faster process.

Organization is Key: Begin by deciding what items you really want to take with you—think long-term. Categorize everything into “keep, trash, or give away” labels. If you’re unsure what to keep, try to visualize where that item will fit in your future accommodations. If you cannot figure out where it fits into the new location, consider giving it away or donate it to a Goodwill near you.

Don’t Toss Your Work: You may never want to take a second look at the project or paper you spent hours working on, but you never know when it could come in handy again. Sometimes future employers want to see what you are capable of and will request to see past projects—especially when you are starting out in your career. Use your best work to build your portfolio when looking for your first job. You never know when an old A+ research paper might help jump-start your career.

For the Sentimental: Consider making a memory box or scrapbook to commemorate your most precious college memories. As you pack, set aside a box for the items that mean the most—concert tickets, photos with friends, your first report card. Once you return home, you can figure out how best or organize your favorite items. Need some ideas of how to get started, look here for the starting steps or some inspiration.

Leaving college can seem overwhelming, but whenever you have a well thought out approach to the move, it can be a quicker experience than you think. Congratulations on graduation and good luck in your future endeavors.

5 Ways to Help Prevent
Identity Theft

In this day and age, large retail companies and social media sites are not immune to an occasional security breech. In the shadow of these events, you may start to wonder, “What can I do to protect my identity?”

 Here are a few simple things you can do today to better protect yourself from fraud, phishing, identity theft and hacking.

Choose good passwords and PINs. Try to choose words or numbers that no one else would be able to guess and do not use the same password on multiple accounts. Sometimes you can switch numbers and letters to make it a harder password to crack. Use an “@” instead of an “A” or a “$” instead of an “S.” The options are limitless. For example, take a look at how we turned this blog name, HowAboutThemApples, into a super safe password, H0w@b0utThem@pp1e$.

Protect Your Computer. Just because you cannot see anything wrong with your computer does not mean that it is safe to use. Hackers use programs and spyware which allow them access to your PC. You can protect yourself with anti-spyware programs that will add a layer of protection and your personal documents.

Don’t Go Phishing. Phishing scams are generally “spoofed” emails and fraudulent websites specifically designed to fool recipients into releasing personal and financial information.  Emails that are sent to you asking for your social security number or credit card information are never okay. Be suspicious of any email that is marked “urgent request” and asks for your personal information. If you are not sure if an email is authentic, do not follow the links in the email. Do not complete emailed forms that request personal information. Double check that websites you are submitting your credit card or personal information through are secure. You can either do this by checking for the padlock that appears at the bottom right of your screen, or look for https:// to appear in front of the web address.

Don’t Accidently Give Your Identity Away. If you sell or trash your PC, restore your PC to factory default to ensure all of your personal data is cleared. You’d be surprised what hackers can find buried in your hard drive.  If you are not sure how to properly clear your PC, take it to a retailer who specializes in computers and ask for their help.

Be careful shopping online. Consider a separate credit card strictly for online purchases. It will be easier to cancel if there are any issues and it will have less effect on your day-to-day life. Do not store any information on a store website. Although it may be convenient, it can be a huge loss to you if the site is ever hacked. Monitor the site URL. Look for the lock symbol or “https” to appear before the site address. These symbols verify that the site is safe.

These steps should help you feel more secure whether you’re simply surfing the net, checking email or making an online purchase.