What’s the Score?

A credit score is a numerical value placed on your credit report, which is a detailed summation of your credit history. It is the GPA to your credit report card. Lenders and financial institutions use credit scores to determine your credit worthiness, and ultimately whether on not to extend you credit. The most common scoring system comes from Fair Isaac Corporation, better known as FICO. FICO credit ratings range between 300 and 850, with 850 being the highest possible score.

What does this mean for you? The higher your score, the lower the assumed risk of default. With a higher risk of default comes difficulty in being approved, and higher interest rates once (if) approval is gained. The better your credit score, the better the interest rate the lender will likely offer. A FICO score breaks down in the following way: 35% of a score comes from payment history; 15% length of credit history; 30% amounts owed; 10% new credit; and 10% types of credit used.

Federal law requires the three big credit reporting agencies—Equifax, Transunion, and Experian—to provide all consumers a free credit report every twelve months, however credit scores are not included in that mandate. Even a few years ago, obtaining your FICO score on your own would have been difficult. Now, however, many credit card companies offer this information free to customers, often conveniently on their online account information page. CreditKarma.com, CreditSesame.com, and Credit.com also offer no-ropes free credit scores.

Having your FICO score readily available can help you better understand your credit standing. If you have had past issues with credit it can give you early notice so you can make changes to improve your score. Taking advantage of credit score reporting is a definite boon for anyone who wants to take and maintain control of their financial health. Carefully read the fine print on sites that offer “free” scores but ask for a credit card number, as it will likely automatically enroll you in their not-so-free monthly credit monitoring service.

Much information—and misinformation—about how to improve a credit score has been circulating for decades. Among these are helpful and true bits of financial advice—pay on time, keep balances low or nonexistent, and on one card instead of scattering balances among many. One persistent, yet incorrect, rumor regarding credit is that old accounts should be closed rumor regarding credit is that old accounts should be closed. Closing all past inactive cards would be akin to erasing a resume’s work history simply because you no longer work at a company. A paid-off account, no matter how old or long inactive, shows good stewardship of a line of credit. You fulfilled your promise to the financial institution and there is no need to expunge that positive point.

Paying regularly. Not paying late, or suddenly switching to lower payments, or increasing charge amounts will all keep your credit score from plummeting. Staggering the free credit report check to once every four months from each agency—Equifax, Transunion, Experian—will provide an entire year of free credit checks so you may keep an eye out for changes/errors. If an error is spotted, immediately write a dispute letter to the reporting agency and work with them to correct the mistake. This close monitoring will help your score remain high. Utilizing the free credit score from your card issuer or from one of the free score reporting websites listed above will keep you informed and prepared.

At some point–such as for buying a house or a car–those three numbers, your credit GPA, will paint a picture of your ability to manage your finances for a lending institution. Remain vigilant and savvy, and it will certainly be the best representation possible.

 

Helpful links:

Credit Cards Offering Free Credit Score Reports

In-Depth Definition of Credit Scores

Forbes on How You May be Ruining your Score

New Policies that May Help Credit Scores

More on FICO

 

 

 

From the Wicomico Library a Hero Helps Youth Plan their Future

Wicomico County Public Library Director Andrea Berstler, is Junior Achievement of the Eastern Shore’s January 2016 Hero

Tell us a little bit about yourself (home/family, education, work, volunteering):

I was born in Philadelphia and all my family members are die-hard Philly sports fans. (yes, even the dogs).  I am very proud to be a Navy brat and to have had parents who taught me the value of a hard day’s work.  I was fortunate to be the first person in my family to get a college degree as well as a graduate degree.  I believe in the power of education and am very thankful for the opportunities that such an education has given me.

I began my career in teaching but through a set of life circumstances found part-time work in a local library.  I enjoy working in the public service industry, especially in one that is changing and growing like public libraries.  It is a time of opportunity and challenge and innovation, which makes it exciting indeed.

I am also a member of the Wicomico Rotary club and enjoy working with fellow Rotarians to serve the community.  I also have spent time working with the United Way of the Lower Eastern Shore and also teaching the Young Entrepreneur’s Academy for the Chamber of Commerce.  My husband and I enjoy golfing and traveling.  We have two grown children and two very spoiled dogs.

 

As our JA Hero, you have made efforts to promote financial literacy, entrepreneurship, and/or workforce readiness in the community. How did you become involved? What is your specific involvement? Why do you feel there is a need to promote this effort?

The role of a library in any community is to make as much information as possible as available to as many people as possible.  That is our job in a nutshell. Financial literacy is one of the key literacies we try to address.  The others are basic literacy (ability to read), health literacy, technology literacy, and information literacy. Having studied business as an undergrad and worked in mostly smaller organizations, I found the skills needed by a business owner to be similar to those needed in running a non-profit.  Similarly, the skills needed to successfully manage a household budget can serve one well in running a business or non-profit budget.  People who lack those skills find themselves behind the eight ball in business as well as in their personal finances.

My role is to make sure that as much as possible, people in our community can find, access, and use information that will help them manage their finances successfully, whether they are personal, business, or non-profit finances.  Sound financial management is one of the keys to a well-run organization or family budget.

 

What can our community members do to be mini Heroes? How do you feel they can affect change in their immediate circle? In the community as a whole?

There are a number of things that individual people can do to be mini-heroes.  If you do not have a young person in your life, become a mentor.  Spend time working with an organization that promotes financial literacy, such as the Library, Junior Achievement, the United Way or other organizations.  It is amazing how having just 2 or 3 more volunteers can broaden the number of lives any one organization can impact.

 

How does your involvement with entrepreneurship literacy efforts affect our area as a whole? How does it affect future citizens and the future of the Eastern Shore?

I suppose that by joining the worlds of public librarianship and entrepreneurship, I am challenging some of the stereotypes of what a librarian does and what an entrepreneur is and does? I believe that the growth of social entrepreneurship resonates with many in our community.  The opportunity to do good work, to make a positive impact in the community while making a living is highly desired to many.  I hope that perhaps they will be encouraged to pursue that kind of work.

 

Is there anything else you would like to share with us?

I think that the need for solid financial skills is truly lacking in many people.  I am glad to see organizations in our community step forward and address that need.  I hope that leaders, parents and caregivers will take time to volunteer and support this work.  These are our future leaders and decision makers.  They need to know how to handle, use, invest, spend and track their finances.

 

Andrea credits her amazing staff at the library for her heroic success 

Community Foundation Grant Helps Area students Gain New Insight Into Realities of Adulthood

Wicomico High School Teacher, Debra Larson, helps a student assess his income and budget during the virtual portion of the Junior Achievement Finance Park program sponsored by the Salisbury Sunrise Rotary $10,000 grant

 

Salisbury, MD, January 5, 2016 — This fall Junior Achievement of the Eastern Shore (JAES) extended the reach of its financial literacy, workforce readiness, and entrepreneurship programs to local high school students through JA Finance Park, thanks in part to a to a $4,000 grant from the Community Foundation of the Eastern Shore in October 2015. This grant has assisted in the implementation of JA Finance Park for approximately one thousand high school students in Wicomico and Worcester counties.

JA Finance Park helps students build a foundation upon which they can make intelligent lifetime financial decisions—including those related to income, expenses, savings, and credit. The JA Finance Park program is composed of thirteen required, teacher-taught, in-class lessons. It culminates in a hands-on, virtual simulation in which students immerse themselves in a reality-based decision-making process that addresses aspects of individual and family budgeting–including housing, transportation, food, utilities, health care, investments, philanthropy, and banking. The virtual activities are designed to allow students the opportunity to utilize the skills they have learned in the classroom and to understand the basic steps of maintaining a realistic personal budget.

In Debra Larson’s Wicomico High School Technology Management Skills for Family Wellness class, students quickly realized the world their parents occupied was not the same as they had imagined. During a simulation grocery shopping activity, student Abby Smith said, “My parents pay for everything so I never thought about the cost of just basic needs.” Julian, a senior, discussed living within his means, “It’s about learning finance, managing money, and being more successful. (I had to) prioritize my spending on absolute needs first and then wants after.”

Local high school students will continue receiving JA Finance Park program throughout the school year. Professionals from the community will be invited to speak to the students about their businesses during the sessions, an element that enhances the students’ “real life” submersion.

Junior Achievement of the Eastern Shore is a 501c3 nonprofit organization committed to giving young people in all communities the knowledge and skills they need to own their economic success, plan for their future, and make smart academic and economic choices. Through its hands-on, age-appropriate programs Junior Achievement inspires our youth to live within their means, prepare for the world of work, and understand the free enterprise system. Today, JAES teaches more than 6,500 students across the Eastern Shore. To volunteer to speak at a JA Finance Park program, donate, or find out more information about supporting JA, email JAES at info@easternshoreja.org, phone at 410.742.8112, or log on to http://www.easternshoreja.org.