Tag Archives: credit report

Why Does My Credit Score Matter?

Your credit score affects just about every facet of your life, so knowing what causes it to rise or fall is important.

Your credit score is made up of three numbers, serving as an indicator of your financial history, wellness and responsibility. These three little numbers can spell the difference between approval and rejection for a mortgage, a job, a rental unit and so much more.

We have outlined how your credit score is calculated, why it matters and steps you can take to improve your score.

How is my credit score calculated?

There are three major credit bureaus in the U.S.: Experian, TransUnion and Equifax. Each one collects and shares information about your credit usage with potential lenders and financial institutions. Most lenders use this information along with the FICO scoring model to calculate your credit worthiness. Some lenders use the VantageScore model instead of FICO.

While there are several slight differences between the FICO and the VantageScore formulas, both scoring models look at the following factors when calculating your score:

  • The age of your credit. How long have you had your oldest credit card? When was your first loan? An older credit history generally boosts your score.
  • The timeliness of your bill payments. Are you paying all of your monthly bills on time? Chronic late payments, particularly loan and credit card payments, can drastically reduce your score.
  • The ratio of your outstanding debt to available credit. The VantageScore formula views consumers with a lot of available credit as a liability, while the FICO formula considers this a point in your favor.
  • The diversity of your credit. Lenders want to see that you have and have had several kinds of open credit. For example, you may be paying down an auto loan, a student loan and using three credit cards.
  • The trajectory of your debt. Are you accumulating new debt each month, or slowly working toward paying down every dollar you owe?
  • Your credit card usage. Financial experts recommend having several open credit cards to help boost your credit score, but this only works if you actually use the cards and pay off your bills each month. It doesn’t help much to have the cards sitting in your wallet.

How does my credit score affect my life?

Your credit score serves as a gauge for your financial wellness to anybody who is looking to get a better idea of how responsible you are with your financial commitments.

Here are just some ways your credit score can affect your day-to-day life:

  • Loan eligibility. This is easily the most common use for your credit score. Lenders check your score to determine whether you will be eligible for a loan. The larger the loan, the stricter the requirements. A poor credit score can hold you back from buying a house, a car, or getting a personal loan at USAgencies Credit Union.
  • Interest rates on loans. Here too, your credit score plays a large role in your financial reality. A higher score can get you a lower interest rate on your loan, and a poor score can mean paying thousands of extra dollars in interest over the life of the loan.
  • Employment. A study by the Society for Human Resources Management found that 47 percent of employers look at the credit scores of potential employees as part of the hiring process.
  • Renting. Many landlords run credit checks on new tenants before signing a lease agreement. A poor credit score can prevent you from landing that dream apartment or it can prompt your landlord to demand you make a higher deposit before moving in.
  • Insurance coverage. Most insurers will check your credit before agreeing to provide you with coverage. Consumer Reports writes that a lower score can mean paying hundreds of dollars more for auto coverage each year.

How to improve your credit score

If you’re planning on taking out a large loan in the near future, applying for a new job, renting a new unit or you just want to improve your score, follow these steps:

  • Pay your bills on time. If you have the income to cover it but find getting things paid on time to be a challenge, consider using automatic payments.
  • Pay more than the minimum payment on your credit cards. Your credit score takes the trajectory of your debt into account. By paying more than just the minimum payment on your credit cards, you can show you’re working on paying down your debt and help improve your score.
  • Pay your credit card bills before they’re due. If you can, it’s best to pay your credit card bills early. This way, more of your money will go toward paying down your outstanding balance instead of interest.
  • Find out if you have any outstanding medical bills. You may have an unpaid medical bill you’ve forgotten about. These can significantly drag down your credit score, so be sure to settle any outstanding medical bills as quickly as possible.
  • Consider debt consolidation. If you’re paying interest on multiple outstanding debts each month, you may benefit from paying off your debt from taking out a personal loan at USAgencies Credit Union. This way, you’ll only have one low-interest payment to make each month. (Note: If you’ll be applying for a large loan within the next few months, it’s better not to open any new cards.)

It’s crucial that you make the effort to improve and maintain your credit score. It’s more than just a number; it will impact your financial wellness for years to come.


As a member of USAgencies Credit Union, you have free access to your credit score and credit report through our Online and Mobile Banking.

Do you have questions about membership or your USAgencies accounts? Connect with us at 503-275-0300 Option 4, or visit our branch at 95 SW Taylor St., Portland, OR. We look forward to hearing from you!

Freshen Up Those Finances for Spring

Give Your Finances a Checkup This Spring
Spring brings showers, flowers and an urge to tidy up. When you dive into spring cleaning this year, don’t forget your finances. Here’s how to give your money a thorough checkup to prepare for a great summer and beyond.

Check the health of your credit report
By monitoring your credit regularly, you can identify problems early. Go to AnnualCreditReport.com to get your free annual report from each of the three national credit bureaus, Equifax, Experian and TransUnion. Your credit score is not on your credit report, but what’s on your report influences what your score is. You can pay to see your score for a small fee.

Some financial institutions, like USAgencies Credit Union, will connect members with free financial counseling. They can discuss things that may be affecting your credit standing, as well as look at whether options such as consolidating debt or refinancing your home might be worthwhile.

Bolstering an anemic credit score
To bolster credit, take steps to clear demerits on your reports. Dispute errors and contact creditors to see whether they’d be willing to make “goodwill adjustments” to remove legitimate blemishes in return for paying a balance in full.

Another strategy for rebuilding credit is taking out a secured credit card. With a secured card, you deposit enough money to cover the limit you’re applying for, and your financial institution keeps that amount on hold for as long as you have the card. A secured card lets you establish a record of responsible credit use — boosting your credit standing in the process.

Tackling costly debt
High-interest debt from credit cards and loans can spiral out of control. To lower interest rates and reduce monthly payments, look into debt consolidation, which combines debt from multiple sources into a single loan. Choose from several solutions including home equity loans and lines of credit as well as personal loans.

With mortgage rates still near historic lows, those holding older mortgages might also benefit from refinancing to get a lower-interest loan.

Tuning up your credit score and tidying up your debts can refresh your finances. Before you know it, your budget will be in healthier shape, and you’ll be able to afford more summer fun.

Roberta Pescow, NerdWallet
© Copyright 2016 NerdWallet, Inc. All Rights Reserved

Questions about how USACU can help you freshen up your finances for spring? Contact us.

 

The Other Sarah & Why You Should Review Your Credit Report Annually

From My Seat : A Blog Series from USAgencies’ Employees

Through my experience working at a credit union for most of my 20s, I’ve had the opportunity to learn financial lessons first hand, via member experiences and my own. I’ve had lessons in everything from building credit, to starting over from a bankruptcy. The biggest lesson I learned was my very first – how important it is to take advantage of checking your credit report annually.

I’ll set the stage: I was 24 years old, a year and half into my job at USAgencies as a teller, and I was still learning banking basics. At that time in my life I had never had a loan and had just one credit card with a small limit. The thought of checking my credit report had never even crossed my mind, seeing I had just the one credit card and I was aware of my limit and balance, which I paid off every month.

One afternoon I received a phone call from Kathy in human resources letting me know that Social Security called to verify my employment status, as they had received an application for a disability claim matching my social security number and name. They had called twice within the last few weeks, and HR told them each time, “No, Sarah is working and currently employed with us at this time.” Kathy suggested I contact Social Security myself to ensure it was cleared up as someone had clearly made a mistake along the way.

When I got off the phone with Kathy I told my co-worker about what as happening, and having been in banking a few years more than me, she suggested I view my credit report just to be safe.

I went to annualcreditreport.com and pulled my credit. There it was….  A collections!!…. an item in collections reporting in my name.  How could this be? I had ONE credit card. I had never been contacted by any agencies asking me for money, and I couldn’t even think of any situation I could have been in that would have resulted in a collection. I started to get nervous, and my mind begin to fill with all the possibilities of what was happening, and the road I had in front of me if this was in fact a case of identity theft.

On the credit report was the contact information for the collection agency so I called them right away. I stated who I was and what I was calling about. They informed me that the collection item was a medical bill from an ER visit up in Spokane, Washington. Not only had I never been in the ER as an adult, I had NEVER been to Spokane. They gave me the hospital’s contact information, I contacted them, and explained the situation. I asked for all the records they had regarding this ER visit. All the hospital needed from me was a faxed request with a copy of my ID and they would send the records to me in the mail in 3-5 business days.

When the packet of information came in the mail I was stunned. There is was in black and white – someone using my FULL name, social security number, and birth date had in fact been admitted to the ER in Spokane, Washington. There was a physical description of this “Sarah Buck” and we couldn’t be more opposite. This was definitely NOT me.

I now was in a panic. Someone had stolen my identity and I had no clue what to do. I needed to dispute this charge, but I also needed to find out what else they were doing with my name! That night, I gathered ALL of the identifying information I had – my social security card, my driver’s license, my passport, my birth certificate – EVERYTHING.

The next morning, I went into the Social Security office, took a number, and waited my turn. When my number was called I went up to the window and explained to the representative my situation, and I needed to know what to do next. She took all of my ID I had brought, and pulled something up on her computer. She then asked me if I had ever been married and changed my name. I said no, never. She explained that there was record of a name change due to “me” getting married. She said given all of the ID I was able to provide, it seems as if I was correct and I may have a case of ID theft on my hands. She went over a few additional items with me, took copies of all my documents, and let me know she opened a case and would be in contact with me within a day or two with next steps.

The very next day I received a call. She said she had good news and bad news. The good news – it WASN’T ID theft. The bad news, it was something much more complicated.

When I was born, on the VERY SAME DAY another girl, in Washington State, was ALSO born. Our parents gave us the same exact name, and we already happened to have parents with the same last name of Buck. When our papers were submitted to Social Security someone assigned us the SAME number. That’s right.  I had shared not only an entire full name with someone else, the very same birthday, and we were assigned the very same SSN. We weren’t even born in the SAME state so how this happened, they had NO Idea. Clearly someone had made a HUGE mistake along the way. What baffled me is how it was able to go on for so long without anyone noticing. I had been working since I was 18, I had filed my taxes every year, I had been enrolled in college, and had a credit card – and nothing!

The SS office informed me that a new number would have to be issued to me to move forward from this very rare situation. A New number?! My parents made me memorize my SSN when I was 10 years old. How was I going to memorize a new one?!

After a few long months of lots of paper work and phone calls, I had a new SSN and all my pertinent contacts had been informed. I even had to speak with the police in Washington because the other Sarah Buck had gone the same path as me, suspected ID theft and filed a police report.

Today I do in fact know my new SSN by heart, and can still even recall the old one. I run into a few issues here and there when needing to verify myself, but I have accepted this will be a lifelong thing and I am ok with it, as long as it is protecting my name.

I now check my credit report every single year to ensure that all the information is mine and accurate.  If this had never happened, I am sure I wouldn’t have started doing this so early in my life, but I now know it’s crucial. Credit is used for many different things from employment and housing to car insurance rates. Check your credit report annually (annualcreditreport.com)! Start early on building your credit on a positive path, and take responsibility for your financial life. It will pay off in the end, trust me!

Sarah, Lending Services

About Sarah:
Without Sarah’s support, the lending department would be smoking, if not in flames. She helps prepare loan for processing, updates materials in the database, handles DMV titling — and that’s all before lunch. This woman does not like leaving the office with anything still in her inbox. As a master of details, Sarah handles her lists like a magical bow and arrow, slaying deadlines preemptively and triumphing over red tape. One of her most gratifying moments came when she worked in Member Service – her radar picked up strange transactions on a member’s account. She was able to initiate processes to protect an elderly member from financial abuse. All this good work can be tiring, leading Sarah to occasionally pause from her labors to spend time with her niece and nephew. They’re pretty cute.

From My Seat is a series of posts written by USAgencies’ employees on a variety of topics. We hope this gives members insight into what we do, why we do it, and provide some financial education along the way. Stay tuned for additional posts in the series in the future.

5 Credit Card Tips for Teens

New to credit? This should help!

If you just received your first credit card or your parents made you an authorized user on their account, you now have more spending power in your financial life. Although people with credit cards tend to spend more in general, developing good habits now will prepare you for more credit responsibility down the road. Check out these tips to ensure that you use credit the right way.

Check your card details
Since so many credit cards exist (all with their own perks, limits and fees), it’s smart to know your account well to avoid missing misunderstanding terms, overusing the card or neglecting a due date. A secured card, which is backed by a sum of money in a savings or checking account and has a credit limit equal to that amount, can help you avoid overspending. Secured cards, which issuers such as USAgencies Credit Union provide, can be good starting points for building credit. When you pay your bill consistently on time, you show that you can handle credit responsibly.

Check your credit report
A credit report gives a picture of your credit overall, from a summary of your loans or credit cards to any inquiries that lenders make when you apply for new credit. The three major credit reporting companies (Experian, TransUnion, and Equifax) all provide one free credit report annually, so take advantage of that. Check for any errors or fraudulent accounts you see and notify the company in question if you spot anything.

Avoid overusing credit
Although you’ve probably heard the phrase “test your limits” used in a positive way, when it comes to credit cards this idea can do more harm than good. A good rule of thumb is to spend at most 30% of your credit limit each month, and keep the monthly balance below that level. Future lenders might consider you a high risk if you spend too much with your cards.

Pay bills on time
Like having an overdue library book, paying your credit card payment after the due date will mean an additional fee. Be over 30 days late and in addition to a late fee, it can drop your credit score, which is the 3-digit number that indicates how good you are with credit.

Pay more than the minimum
Your monthly credit card bill usually states the minimum amount you owe, but what it might not say is that you’ll have to pay interest on the remaining balance in future months. It’s better to pay the complete amount you owe so you can avoid extra costs and help raise your credit score.

As empowering and convenient as credit cards can be, they also can work as effective tools to help build your credit record over time. Keeping up good credit card habits can help you avoid debt while qualifying for loans and other products with favorable terms.

By Spencer Tierney, NerdWallet