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. 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.
Monitoring your credit report and credit score can also help you catch identity theft and credit fraud activity faster. July 2018 is Military Consumer Protection Month, a perfect opportunity to encourage your constituents to show their credit some extra attention.
Please share the article, social media content, graphics, and resources provided with your constituents, your partners, and the general public. As always, please encourage individuals to take the Military Saves Pledge—an important step in creating a plan to reach their savings or debt reduction goals. After all, those with a plan are more likely to achieve their goals!
Your feedback is important to us. Please take a moment to complete a four-question survey on the usefulness of the resource packet material.
In This Packet:
For use in communications that directly reach your constituents. We encourage you to use this content as guest posts or rewrite them as your own.
By America Saves
By Federal Trade Commission
By: Darlene Aderoju
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:
- 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 your score again. If you can’t afford to pay your balance in full, at least pay the minimum amount on time.
- Keeping a high credit card balance lowers your score.
Believe it or not, carrying a high credit card balance from 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.
- 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.
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.
Share the following messages with your followers.
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/2LxtodA v/@MilitarySaves #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. https://bit.ly/2JHzCFV v/@MilitarySaves #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. https://bit.ly/2Nwjcmc v/@MilitarySaves #SavingsTipTuesday
You can get out of debt and save money by managing your debt and credit responsibly. https://bit.ly/2LAuy8f v/@MilitarySaves #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 @MilitarySaves #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
A high #credit score can make it easier to get an apt., utilities, or even a job. http://ow.ly/MoKT9 v/@MilitarySaves #SavingsFactFriday
Carrying a large balance on your credit cards from month to month can lower your credit score. v/@MilitarySaves #SavingsFactFriday
Let @MilitarySaves help you stay committed to your savings goal! Take the pledge today: https://bit.ly/1QJmGvA
Want your free #credit report from the three main credit bureaus? All you have to do is ask! http://bit.ly/2LtzlIt @MilitarySaves
Have a savings tip or story that others might benefit from? Share it w/ @AmericaSaves and you could win $25: http://bit.ly/2oiP4iv
Share the following resources with your audience and with partnering organizations.
From Military Saves
- Do you know the credit score basics?
- Financial Strategies by Generation
- Five Ways to Raise Your Credit Score in Less Than a Year
- Get Out of Debt
- How to Build Wealth When You're Not a Homeowner
- Millennials--Don't take a Vacation from Your Money Goals this Summer!
- Planning for College Expenses
- Seven Savings Tips for Young Adults
- Young and in the Military: Five Tips for Financial Success
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
Credit Reporting Bureaus
FINRA Investor Education Foundation:
Hands on Banking, WellsFargo, All about credit
- Expanded Credit Protections for Service Members and Their Families
- How to Reduce Your Dependency on Credit When You’re in the Military
The USAA Education Foundation:
- How Do They Calculate My Credit Score
- Why Does Paying On Time Matter?
- Why Should I Think About Credit?
- Written by Tammy G. Bruzon
- Published: 27 July 2018