Good credit plays an important role in your financial life. Not only is it essential for obvious things like qualifying for a loan or getting a credit card, but also for less obvious things like getting cellular telephone service, renting a car, and perhaps even getting a job. Click here to download the Importance of Credit History and Successful Savings Packet or read below.
- What is a credit report and score?
- Why is saving so important to good credit?
- How do I start saving?
- Why is good credit management so important?
- 5 tips for building good credit
- Is credit repair a good idea?
- What is loan consolidation?
- What is a debt management plan?
- Where can I get help with debts I can’t afford to pay?
- FDIC model safe accounts template
- Frequently asked credit questions
- Additional resources
A credit score is a three-digit number that measures how likely you are to repay a loan on time. It uses information from your credit report to predict the risk of you not paying that loan back 24 months after scoring.
A credit report is an explanation of your credit history. It states when and where you applied for credit, whom you borrowed money from, and whom you still owe. Your credit report also tells you if you’ve paid off a debt and if you make monthly payments on time.
How can I get a copy of my credit report and score?
The three nationwide consumer reporting companies- Equifax, Experian, and TransUnion are required by The Fair Credit Reporting Act (FCRA) to provide you, at your request, with a free copy of your credit report once every 12 months. (Available at www.annualcreditreport.com)
How much does it cost?
You will have to pay around $14 to receive an addition credit report within 12 month of when you received your free report. To receive a copy of your credit score, you will have to pay one of the three nationwide consumer reporting companies around $14.
Who do I get help from if I find something wrong?
You are responsible for correcting inaccurate or incomplete information in your report. There are two things you should do if you find an inaccuracy. First, tell the consumer reporting company (where you got the report from), in writing, what information you think is inaccurate. Consumer reporting companies are required to investigate anything in question and must forward all relevant data to the organization that provided the information. Second, tell the creditor or other information provider in writing that you dispute an item.
Who has access to my credit score?
The FCRA specifies who can access your credit report. Those who have access to your credit report include creditors, insurers, employers, and other businesses that use the information in your report to evaluate your applications for credit, insurance, employment, or renting a home.
It is important for all Americans to have savings. Having a savings account allows people to pay for emergencies, gives people financial freedom, and can contribute to a higher credit score. A high credit score can make it easier to rent an apartment, get utility services, and even get a job.
Paying for Emergencies
Having a savings account allows people to pay for emergencies on their own instead of turning to high-interest credit cards or payday loans. Not being able to pay off these types of loans can severely affect your credit score.
Higher Credit Score
Having savings allows you to pay your bills on time. Paying your bills on time can lead to a higher credit score.
When it comes to saving money, the sooner you start the better. It's not an act that's accomplished overnight, but a process that happens gradually and grows over time. Just remember, slow and steady wins the race.
Making ends meet can be a challenge. And you may wonder how it's possible to spare anything. But any amount saved - a quarter, a dollar - is progress. Those quarters and dollars add up. As you get into the habit of routinely "paying into your savings" you'll see the money you're setting aside grow.
The first thing you have to do to start saving is take a look at your finances and make sure that you are spending less than you earn.
· Make a budget
· Find ways to cut back on spending
· Set up automatic savings
Good credit plays an important role in your financial life. Not only is it essential for obvious things like qualifying for a loan or getting a credit card, but also for less obvious things like getting cellular telephone service, renting a car, and perhaps even getting a job.
Managing your credit will also help you save for a rainy day. A strong credit history, reflected in good credit scores, will let you qualify for lower interest rates and fees, freeing up additional money to set aside for emergencies, retirement, and other smaller unexpected expenses. Decreasing debt and increasing savings reduces stress and leads to greater financial freedom.
The good news is that having good credit is not difficult. Simply follow these five fundamentals of good credit management and you will build and maintain a credit history that will enable you to get the credit you need, when you need it.
- Establish a credit report
To establish a credit report you must have an open, active credit account. To get your first credit account talk to your bank or credit union.
- Always pay as agreed
Make at least the minimum payment due each month and never be late. Delinquent payments and payments that don’t meet at least the minimum contractual amount will have the most immediate, negative impact on your credit report and credit scores.
- Keep your balances low
Keeping your balances low as compared to your available credit limits is a sign of good credit management and shows lenders you are a good credit risk. Your utilization rate, also called your balance-to-limit ratio is a key component to credit scores.
- Apply for credit wisely
Do not apply 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. Apply for credit when you need it, and only in the amount you need. Just because credit is offered, doesn’t mean you have to accept it.
- Demonstrate good credit habits over long periods of time
In order to have good credit scores you must demonstrate a habit of good credit management over a long period of time.
Every day, companies target consumers who have poor credit histories with promises to clean up their credit report so they can get a car loan, a home mortgage, insurance, or even a job once they pay them a fee for the service. The truth is, these companies can’t deliver an improved credit report for you using the tactics they promote. It’s illegal: No one can remove accurate negative information from your credit report.
A Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments. Use a loan consolidation calculator to find out if this is a good option for you.
Organizations that advertise credit counseling often arrange for consumers to pay debts through a debt management plan (DMP). In a DMP, you deposit money each month with a credit counseling organization. The organization uses these deposits to pay your credit card bills, student loans, medical bills, or other unsecured debts according to a payment schedule they’ve worked out with you and your creditors. Creditors may agree to lower interest rates or waive certain fees if you are repaying through a DMP. Some organizations that offer DMPs have deceived and defrauded consumers. If you are paying through a DMP, contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the organization handling your DMP.
In most communities, there are agencies that can help you manage your debts. The most helpful and most widely available are non-profit Consumer Credit Counseling Services (CCCS). CCCS counselors can work with you privately to help you develop a budget, figure out your options, and negotiate with creditors to repay your debts. Call 1-800-388-2227 to locate the office nearest you.
If your debts are too large, you may want to consider bankruptcy. Bankruptcy can give you a fresh start, but it is a serious step that can make it harder to get credit for years after you declare bankruptcy. Call your local Legal Aid or Legal Services office for advice. If you don’t qualify for their services, ask them for a referral to a bankruptcy attorney
The FDIC Model Safe Accounts Template provides insured institutions with guidelines for offering cost-effective accounts that are safe and affordable for consumers. The accounts reflect the following guiding principles: transparent and reasonable rates and fees and access to banking services that are FDIC insured.
Do Missed Payments Affect My Score?
How many payments you miss, if you don’t pay the debt at all, and how long ago late payments occurred are all important. The further in the past a late payment occurred, the less impact it will have on credit scores and lending decisions. That is why it is important to catch up on your payments if you have fallen behind.
How Can I Get Credit if I Can’t Open a Credit Account?
If you cannot get a credit account through a bank or credit union, you may need a friend or family member to cosign for you or add you as an authorized user on an existing account.
Will Closing Accounts Raise My Credit Score?
Be cautious about closing accounts. Doing so will reduce your available credit limits and will increase your overall utilization rate, making it appear as if you have suddenly taken on more debt. The result is a temporary negative impact on your credit scores.
Will Applying for New Accounts Raise My Credit Score?
Each time you apply for credit an inquiry is added to your credit report. Inquiries are a record that a lender has reviewed your credit report in response to your application for credit. They indicate that you may have new debt that is not yet shown as an account in your credit report, and so represent an unknown risk to lenders. For that reason, recent inquiries can have a small but meaningful impact on credit scores. However, that impact is temporary.
How does Shopping for a Car or Home Affect My Score?
Inquiries for auto purchases and mortgage loans are unique. Because lenders recognize you will shop for the best auto and mortgage loan rates, inquiries for those types of loans in a short period are counted as a single inquiry by credit scoring systems. Doing so enables you to find the best rates with little or no impact on your credit scores.
What is the First Step to Rebuild My Credit Score?
The first step in rebuilding strong credit scores after having credit problems is to bring your accounts current by paying any remaining past-due payments. Before your credit scores will improve significantly, however, you must show that you have regained control of your credit by making on-time payments over time. The more serious your past credit difficulties, the longer it will take to rebuild a positive credit history and strong credit scores.
Consumer Federation of America’s Vantage Credit Score Website
Financial Industry Regulatory Authority (FINRA) website
My Fico, About Credit Scores
Money Under 30, Understanding “Your Number”
Bankrate, Credit Scores Explained
U.S. General Services Administration, Federal Citizen Information Center and Fair Isaac Corporation (2008)
Federal Trade Commission’s, Facts for Consumers (2011)
Do you spend weeks eagerly anticipating your tax refund? When the money finally comes in, is it gone tomorrow? Many people view tax refunds as unplanned bonuses. They see the money as a gift from the government, to use for splurges or treats. A tax refund provides the opportunity to improve your financial situation.
- Pay down your debt. Use your refund for some much needed debt relief. Pay off your credit card balance. If you have an outstanding balance on more than one credit card, try to pay off the smaller, high-interest rate balances first. That will free up more funds to put toward larger balances. Alternatively, you can apply your refund toward other debts, like a car loan or a home equity loan.
- Save for a rainy day. Why not give yourself an even bigger return on your tax refund by putting the money into a savings account, CD, or retirement fund? Your tax refund will continue to grow if you put it into savings or invest the money. It's always helpful to have a savings account to draw from when a major car repair bill, medical emergency or other unexpected expense comes along. That way, you don't have to borrow money and add to your debt-load.
- Consider your financial goals. Trying to save for a house or car down payment? Hope to contribute to your child's college tuition? Consider applying your tax refund toward these goals. If you don't yet have a set of short-term and long-term financial goals, put one together. You'll be more conscientious about how you spend your refund or any other extra money that comes your way.
Remember, you work hard for your money and you deserve to enjoy a healthy financial lifestyle. Put some thought into how you use your tax refund. Making smart financial decisions is not always easy, but it will definitely benefit you and your family over the long term.
Tax Time is a great time to kickstart or grow your savings for the future! U.S. Savings Bonds are one safe and easy way to do it.
There are a lot of great reasons to buy U.S. Savings Bonds at tax time.
- You do not need a lot to get started — start with as little as $50. Use just part of your tax refund to start saving.
- It is simple at tax time. Just select the amount you want saved from your income tax refund and you’ll receive your bond in the mail.
- Earn interest. Your money starts growing immediately.
- Bonds are safe. Bonds will never lose value and they are backed by the U.S. Government.
- No fees. There are no fees to buy or cash in your bond.
- Money for the future. You help your loved ones live their dreams when you buy bonds.
- Gift savings to your loved ones. Bonds can be purchased in someone else’s name – so you can help jumpstart the savings and dreams of the people you care about.
What are tax time bonds?
Tax Time Savings Bonds are Series I U.S. Savings Bonds. Issued and guaranteed by the U.S. Treasury Department, Tax Time Savings Bonds can be purchased directly on your tax form. You can cash in your bond after one year at most banks or credit unions, but the longer your keep it the more it will grow in value. Your bond will earn interest for up to 30 years. If you cash your bond within 5 years, you’ll lose the last three months of interest.
Growth on your bonds is guaranteed! Bonds make saving safe, simple and secure.
To learn more visit www.bondsmakeiteasy.org
- Military Saves Week is an annual opportunity for installations and organizations to promote good savings behavior and a chance for servicemembers and their families to assess their own saving status. Typically thousands of organizations participate in the Week, reaching millions of people.
- We know that the hard work of getting people to change their financial behavior takes time, which is why Military Saves wants to assist your efforts to encourage financial action and savings behavior change throughout the year. Sign up to receive news and updates if you would like to be among the first to know when we release a new packet.
- America Saves makes it easy for your organization to get involved. Take a look at the different options, and choose the best fit for you and your colleagues. We look forward to working with you!
- If you are interested in organizing a community campaign, we are eager to help. After reading this brief overview, take a look at the campaign resource links that follow to get a better idea of what goes into leading a local America Saves campaign. Then, please be in touch with us at the contact information below.
- Military Saves can help you develop your goals and take action. When you take the Military Saves Pledge, you'll receive the following benefits:
- Military Saves is excited to announce the launch of our NEW goal-based text message service to Military Savers. Through these goal based text messages with helpful tips and reminders, individuals will be better encouraged, supported, and motived to save towards their goal.
- An archive of our quarterly newsletters. Features a true saver story, tips from savers, and news you can use.