Every time you “borrow money” for example finance a car, or get a credit card, you open what’s called a “Trade Line”. As long as you have one trade line with a payment history showing 6 months or more activity, within the last 6 months, you’ll get a score. It’s actually called a Fair Isaac & Company (FICO) score. Your score is made up of your payment history, capacity, length, accumulation, and mix of credit and debt. Here’s how each is weighted and exactly what each of these means:
35% Payment History (on-time pays or delinquencies, more weight on current payment history)
30% Capacity (amount owed on revolving debts/credit cards)
15% Length (length of new credit and total credit history)
10% Accumulation (trade line open dates and the # of inquiries on a credit report)
10% Mix of credit and debt within the last 18 months (percent of revolving credit like a credit card that you can pay down and keep using, and installment credit like a car loan which has a specific pay off date and then you’re done)
Note* Installment debt can help to raise a score. Revolving debt can help to lower a score.
Every score fits into a category with “A” being Outstanding Credit, and “E” being Not-so-Outstanding Credit. Once you know what goes into your score, you can always work to improve it if needed. It is not a set number. If your financial habits change, so too will your score.
Here is the range of credit scores:
“A” Credit 680 +
“B” Credit 640-679
“C” Credit 600-639
“D” Credit 550-599
“E” Credit 549 and below
There are some actions that can hurt your score and others that can help.
These actions will not do you any favors and will help to bring your score down:
- Missing payments (regardless of dollar amounts, it can take 24 months to restore credit with one late payment)
- Credit cards at capacity (i.e. maxing out credit cards)
- Shopping for credit excessively (# of inquiries on the credit report)
- Opening up numerous trade lines in a short time frame (escalating debt)
- Having more revolving debts/loans in relation to installment debts/loans
- Closing credit cards out (this will lower available capacity)
These actions will are in your favor and will help to bring your score up:
- Pay off or pay down credit cards
- Do not close credit cards because capacity will decrease
- Move revolving debt into installment debt
- Continue to make payments on time (older late pays will become less significant with time)
- Slow down on opening new accounts
- Show good credit habits over an extended period of time
There are also a few things that don’t affect your score:
To truly see the impact your score has on your finances, check out this table. Look at the savings the folks with an “A” Credit rating receive over those with an “E”. It’s quite a difference.
Sample chart base on Q4 2014 rates
The ‘549 and below “E” borrower’ credit score will end up paying $64.99 more than the ‘680+ “A” borrower’ credit score pays per month. The cumulative interest is $3,899.31 more over the full 60 month term. That’s a lot of money to be saved!
If your score is not where you want it to be or maybe you’re not even sure what it is, we’d be happy to review it with you. First Source began as a Teacher’s Federal Credit Union, so our roots are based in education. We are happy to sit with you, go through your credit score line by line, and offer suggestions along the way. We also offer a Balance Financial Fitness program free of charge that includes budget worksheets to help keep you on track.
Member Testimonial: Mark Simon
December 22nd, 2014
“In the short time I have been with First Source FCU I have been happier than the 10+ years I was with another well-known bank. The service I receive now is the way it should be. I opened my account earlier this year and asked at that time if I could deposit checks from my phone. I was told it was not up and running yet, but would be over the summer. This was really important to me because I usually don’t have time to go to the bank, so I like to do everything on the go whenever possible. To be honest, I deposit most checks from my car in between photo shoots. I’m a photographer.
I learned the good news that the ‘memberDEPOSIT’ mobile check deposit service was up and running in August through the First Source e-newsletter I get monthly. I was so excited! I already use the mobile app and enjoy the simplicity of it. I felt the deposit piece was the only thing lacking.
Having the ability to deposit checks from home, or work, or while standing on top of a mountain is the most convenient part of banking for me, especially with my busy schedule. I know everyone is different but for me, going inside the credit union feels archaic; everything down on paper with account numbers I need to remember and share numbers that I can get confused. The mobile app in general makes banking a daily thing for me as I can easily check my balances, transfer money, and deposit checks while on the go. Banking has actually become a joy rather than an errand. I recommend memberDEPOSIT to everyone I know and I will use it until the paper check is no longer used.”
– Mark Simon
First Source FCU Member
Protect your account while holiday shopping
December 15th, 2014
Remember to be vigilant this holiday shopping season. Check your statements and transaction history often to ensure all the purchases are valid. Shopping from the comfort of home on Cyber Monday? Make sure you’re on a secure site. The url should start with “https”. The “s” is for “secure”. When it’s time to process the online payment, make sure there’s a security icon on the page; most often it appears as an image of a lock. But rest assured, as a First Source card holder, you are not liable for fraudulent purchases on your First Source credit or debit cards.
Taking a Stand Against Bullying: Michele Grider
November 18th, 2014
There are some staggering NYS bullying statistics I’d like to share with you today. During the 2009-2010 school year, 23% of U.S. schools reported that bullying occurred among students on a daily or weekly basis. In 2011, 28% of students aged 12 to 18 years reported being bullied at school. The most common form of bullying was based on physical appearance. 66% reported that students were harassed at least sometimes because of their looks or body size.
That’s the bad news.
The good news is New York State’s Response – The Dignity for All Students Act (DASA)
DASA was born out of legislative concern to prevent bullying in our schools. Media coverage of egregious cases brought more attention to the severity of the situation and something needed to be done. The Act was signed into law by Gov. Patterson on September 8, 2010 and became effective July 1, 2012.
The Purpose of this Act is to foster civility in public schools by way of prevention and prohibition of bullying, discrimination, and harassment on school property and at school functions. It also adds additional “protected classes” to the federal protected classes.
DASA states: At its core…No student shall be subjected to bullying, discrimination and/or harassment by employees or students on school property or at a school function.
Schools are taking this very seriously now. It is no longer, “someone else’s problem”. Every school in New York State must have a Dignity Act Coordinator (DAC) and bullying protocols in place.
As proactive steps are taken in our schools check with your children. Do they know who the DAC is in their school? Do they feel that their school offers a safe environment to learn? If not, do they know where to turn, who to talk to? NYS will not tolerate harassment in our schools. Our kids need to know it’s okay to speak up.
-Michele Grider, NYS Dignity Act/Bullying Prevention Coordinator
Oneida Herkimer Madison BOCES