In the credit–based world we live in, there is no denying the impact, positive and negative, this complex mathematical formula has on our lives.
From getting a loan to getting a credit card to getting a job, your credit score is important. In fact, just about any entity with which you want to do business is apt to judge you, at least in part, on your credit score. So yours better be in top condition. Here, courtesy of the Financial Planning Association in Denver, Colorado, is advice on keeping a healthy credit score:
Know your score.
Request a free credit report from www.annualcreditreport.com (877–322–8228). Review the report for inconsistencies and other issues that need addressing and then request your credit score from at least one of the major credit bureaus:
Experian (www.experian.com; 888–397–3742)
Equifax (www.equifax.com; 800–685–1111)
TransUnion (www.transunion.com; 800–888–4213)
Know what it is and how it is calculated. Credit scores are used by lenders to help determine whether a person qualifies for credit based on an assessment of the individual's ability to pay off his/her debts. The higher one's credit score, the lower the credit risk they present to lenders. Credit scores are calculated from data in five categories.
Payment history (on bills, loans, etc.) and amounts owed (credit balances) account for about two–thirds of the score. Length of credit history, new credit, and types of credit used comprise the rest. Credit scores range from 300 to 850. A score of 750 or higher is considered “excellent,” 720 to 749 is “very good,” 660 to 719 is “good,” 620 to 659 is “fair,” and 619 or lower is “poor.”
Know why it matters.
Credit score is not just a factor in determining whether you get a loan or a line of credit. It often determines how much you will pay for credit (for instance, the better your credit score, the lower your interest rate). So having a healthy score can save you money.
Know how to maintain a healthy score. Here are some tips:
Pay bills on time.
Nothing impacts a credit score more than your bill–paying history and habits. And no bill is too small to overlook. “Even a single skipped bill to the utility company can ding you,” said Kevin Reardon, CFP – a financial planner at Shakespeare Wealth Management in Pewaukee, Wisconsin.
If you struggle to pay bills on time, set up your online banking to make automatic bill payments or provide payment reminders.
Instead of skipping a payment altogether, make a late or short payment.
After a late or missed payment, work toward keeping up with your bills and staying current with payments. Positive payment patterns going forward can overshadow a past payment problem.
Keep credit card balances low and avoid maxing out cards. Carrying a high level of debt will likely hurt your credit score. Maxing out your available credit surely will.
Pay down your debt over time.
Think twice before closing the accounts of credit cards you do not use. Closing credit accounts may actually lower your credit score. If you plan to close an account, start with one you opened recently, and for the sake of credit history, leave your oldest credit card account open.
Do not open a bunch of new credit accounts at once. It can lower your credit score.
Protect your personal information.
Your social security, credit card, and bank account numbers should be protected. Identity theft is a real and growing threat to much more than your credit score. So, according to Reardon, it is worth considering subscribing to a service that monitors people's credit reports to identify signs of identity theft.
Financial Planning Association (FPA) ©2015
Common, Self–Generated Time Wasters
Not Planning Ahead: When we don't plan out goals or objectives, we can be overwhelmed by the magnitude of the task in front of us. In addition, when we start off on a project before planning, we can easily encounter roadblocks that we could've seen had we thought ahead. Create a list of priorities on a daily, weekly, and monthly basis. Keep it somewhere you can routinely see.
Being Disorganized: You create more work for yourself when you don't know where things are. Ask yourself if you can easily find work–related items; if not, rearrange your workspace so you can work more efficiently. Try to keep separate areas for works in progress and accomplished projects. This way you can better prioritize your tasks.
Procrastinating: We can waste a lot of time thinking about and putting off things that need to get done. Oftentimes, a task seems so overwhelming, that we don't know where to start. When this happens, break a big project into a series of smaller tasks, and give yourself a deadline. Reward yourself when you accomplish the goal. You can have other people check your progress. Ask a co–worker to check in on you regarding tasks you hate to do. Try to do undesirable tasks early in the day so you don't spend big portions of your day worrying about annoying tasks that you have to get to later on.
National Observances March
– American Red Cross Month
– National Woman's History Month
– National Social Work Month
– National Nutrition Month
Week of March 1–7
National Severe Storm Preparedness Week
National Sleep Awareness Week
Week of March 8–14
LGBT Awareness Week
Week of March 15–21
Health Information Professionals Week
Week of March 22–28
Tsunami Awareness Week
St. Patrick's Day
If you would like a copy of this month's Navigator, click on the link to the PDF file to the left under “Downloads”.