Bellwether's Blog on life and money
Do you know the factors that make up your credit score? Image from WikiHow.com
Remember when you were younger and borrowed money from your parents? If they had the money, they would usually lend it to you knowing you would pay it back. But once you leave home, borrowing money relies heavily on your credit score, and not so much your parents…unfortunately!
What is a credit score?
A credit score is a number that comes from analyzing a set of factors from your financial history. The higher your number, the more creditworthy you appear to your financial institution. Having a high credit score indicates that you are a lower credit risk.
There are three credit bureaus in the U.S. (Equifax, Experian, and TransUnion) that maintain consumer credit files from which the factors of your financial history are pulled, and different scoring models that determine your credit score and where it falls within the acceptable credit score range. One of the most-used models that determine your credit score is called FICO (a FICO score.)
A FICO score takes these factors into consideration: your on-time payments, how much credit you've used (current debt burden), how long you've had credit, the types of credit you've had, and how many recent applications you've made for credit. Each of these factors is ranked in terms of importance:
Payment history - 35%
Debt load - 30%
Length of credit history - 15%
Types of credit - 10%
Recent credit applications - 10%
What is a good credit score?
The highest possible FICO score you can achieve is 850, while the range of the average American is between 301–800. Here is how the different ranges of credit rank according to most financial institutions (via credit.com):
• 750+ is excellent
• 700–749 is good
• 650–699 is fair
• 600-649 is poor
• 599 and under is usually considered subprime, or a score that needs serious improvement
Where your score is doesn't only determine how much money you can borrow, it helps determine what your interest rate should be.
How to improve your credit score
With a little patience, you can improve your credit in a few different ways.
- Think small—Open one credit card account for a small amount of credit and use it for purchases you know you can pay off each month, such as your cell phone bill. This will improve your payment history.
- Spend small—Never let your credit usage get close to the maximum. For example, if you have a $500 limit, try to keep your monthly balance at 30% of your limit. This will improve your debt load, and your score.
- "Rinse and repeat"—Doing the above 2 items consistently over time will improve your score, since your payment history and debt load, the 2 primary factors in a credit score, are also strong.
Are you wondering what your credit score is?
There are places where you can obtain a free credit report, or a more detailed credit report with a score for a small fee. Check out websites such as FreeCreditReport.com or CreditKarma.com. You can also try out SaveUp.com to hone your personal financial know-how skills by playing games and winning prizes.
You can also contact Bellwether to help you understand your credit score, learn how to improve it, and—more importantly—create a plan for the things you may need to purchase on credit, such as a new car or your first home. Call us at 603-645-8181 for answers to your credit questions!1 Comment(s)
I recently had the pleasure of attending the Go Red for Women NH luncheon at the Radisson Hotel in Manchester, NH. Go Red for Women is the social movement created by the American Heart Association to bring awareness about heart disease, the number one killer of women. The luncheon was an inspirational and motivational venue to bring people together to dispel the myths and help fight the disease. The theme of this year’s luncheon was: “Life is Why,” everyone has a reason to live a healthier, stronger life.
There were so many amazing stories, but one that really stood out to me was about Mary, a 50-something woman. She told us the story of the day she had a severe heart attack. Her day was just like one most of us recognize. She had places to go, things to do and people to see. She described how she woke up with cramping in her shoulders, how she dismissed it and went about her busy day. By the end of the day she was so miserable, she went online to goredforwomen.org to research the symptoms of a heart attack. Throughout the entire episode she was in denial that she was having a cardiac event, a very common reaction. The kicker to the story….Mary’s a nurse.
Many women are not aware that heart disease is the number one killer of women, more than all forms of cancer combined. It’s so important for women to know the factors that increase their risk for heart disease. As the daughter of an adoptee I’ve had to deal with a few unplanned medical issues, so I’ve become more vigilant with my health.
Here’s what I’ve learned about heart disease:
Family History: The risk of heart disease and its risk factors are strongly linked to family history. It’s important to know as much of your family’s medical history as possible.
Smoking: Smoking increases the risk of heart disease and stroke 2 to 4 times and can take as much as 14 years off of your life. If you’re a smoker, there are a number of smoking cessation products and programs available to help you quit and the good news, your risk of heart disease is cut in half one year later.
High blood pressure: When left untreated high blood pressure damages and scars your arteries, which can have deadly consequences. Adopting a healthy lifestyle that includes a diet low in salt, saturated fats, cholesterol and alcohol will help you manage, possibly even prevent high blood pressure.
Diabetes: People with diabetes are 2 to 4 times more likely to have heart disease. If you have diabetes or if it runs in your family it’s important to work with your doctor to create a regime to manage it.
Weight/physical activity: Carrying too much weight, especially around the waist area can increase your risk of heart disease. It’s important to include some form of physical activity in your daily routine, it can add 2 hours to your life, for every hour of regular exercise.
Cholesterol: While your body needs cholesterol to function and stay healthy, high cholesterol puts you at risk for heart disease or stroke. Start by getting your cholesterol checked. Know your health numbers, The American Heart Association recommends everyone over the age of 20 get their cholesterol checked every 5 years. If you have high cholesterol, work with your doctors to design the proper treatment.
As a young woman I didn’t give too much thought to the fact that my mother is adopted, as I’ve gotten older and had children of my own I’m increasingly aware that I know very little about my her biological family’s medical history. I’ve urged my mother to reach out to her family, to get as much information as possible, if not for herself, for her children and grandchildren. In the meantime, I took the Go Red Heart Checkup and I am making sure my lifestyle is healthier because my children are my reason “why.”0 Comment(s)
Nothing beats seeing that first, real paycheck deposited into your checking account. There’s a feeling of accomplishment, confidence, and excitement – excitement that you might actually be able to spend money on things you want, rather than only what you need. And, I don’t want to put a damper on any of those feeling, because they have been earned, but before you go buying a full wardrobe from The Limited or scheduling a test drive in a new Audi, take a step back and realize that once the money is gone, it’s gone. Acquiring a professional wardrobe, securing a reliable car, fueling said car, and feeding yourself, all cost money, and unfortunately, living paycheck to paycheck is a reality for many post-grads trying to make ends meet. Here are some tips on how you can look the part, while still saving money along the way.
- Pay Yourself First! Honestly, this deserves the #1 spot because it is the most important. It’s hard to save money after bills and other expenses are paid. Savings needs to be a priority and paying yourself first makes sure it gets done. And to make it easy, put savings on autopilot by having your paycheck or a portion of it direct deposited, or set up an automatic transfer each time you get paid
- Set a Realistic Clothing Budget. Yes, treat yourself to an outfit or two, but be sure to incorporate the “Rule of Three”. Basically, to honestly justify the purchase, suggested by Michelle King of xojane.com, it must be able to be used in 3 other outfits consisting of pieces already in your closet. Then as pieces begin to show wear or get damaged, replace them. But before you run out to the store, check out #ootd blogs that tell you where to get certain items (or look-alikes) for half the cost. You can also find new and gently used items at online thrift shops like ThredUp. (you can also re-sell your gently used items on ThredUp and make money or credits to use toward other items!
- Take Care of Your Stuff! Now that you’ve bought some nice outfits, take care of them so they last. Think of it this way, the longer you make something last, the less money you’ll have to spend on buying more pieces. Wear, wash, hang, iron, as the tag says, and they’ll look new for years rather than months. Woman’s Day has some great ideas on how to care for your clothing. (This tips also applies for other items you’ve purchased – entertainment systems, electronics, appliances – treat them good and they’ll return the favor by living a longer, happier life!) Be aware when you buy clothes that say “dry clean only” you’ll be adding some extra money in clothes maintenance cost. You may want to minimize the number of items you buy that require special care.
- Don’t Wait, Ask! Television, internet and cell phone bills tend to be some of your larger bills, other than your housing and car payments, but don’t just accept the price you are paying. Call them up and ask for a better deal or discount. Another way to save by asking is if you are willing to pay cash, according to Bankrate, at restaurants, gas stations, and even the doctor’s office you might be eligible to receive a discount, so ask, it can’t hurt!
- Drive Down the Cost of Car Ownership. Just as you take care of your clothes and electronics, taking care of your car can save you money too. It’ll last longer, cost you less on maintenance, and lower your gas costs as well. But if it is time to purchase a new vehicle, be sure to do your research. Look for deals that make sense for you, whether it’s deciding to lease over buy, buying an electric or hybrid vehicle, or finding an offer that includes all your maintenance. Don’t just jump at an offer because the car comes with satellite radio and a sunroof, make sure the final monthly payment (after warranties, taxes, and other fees are added) fits into your budget. And then, once you own a car, check out these ideas to learn how to save money while you are driving.
Once real life starts, it doesn’t stop for a long time. And sure, we’re all busy but it’s important to focus on things that are important and saving money is one of them. Living paycheck to paycheck is stressful, so start early and save where you can, no one ever regrets saving money.2 Comment(s)
Prepare your home for winter with our fall home checklist.
We may still have a few warm, sunny days left, but I think it’s safe to say that it’s definitely fall in New England and we are slowly creeping into the next season. With this comes colorful leaves, cooler weather, and the perfect time to get your home ready for winter.
- Clean your gutters and downspouts. Removing the buildup of leaves will help prevent wood rot problems, pest infestations, ice dams, and ruined gutters.
- Check your roof for any damage, corrosion or leaks. Don’t wait until the dripping starts; stop it before the winter arrives.
- “Clean chimneys don’t catch fire.” Call a local, certified professional to inspect and, if necessary, clean your fireplace or wood burning stove. Whether its creosote built up in your chimney or a rodent nest, the result can be a devastating fire. Some condo associations require an annual cleaning and inspection. Not a bad habit to get into.
- Seal up your windows and doors. Applying silicone caulk to the gaps between siding and the window or door frames can prevent leaks, and help you save on the heating bill!
- Trim trees and branches around your home. New England winters are notorious for wet or icy snow which causes branches to crack and break. Remove any limbs that are dangerously close to power lines or to the roof of your house.
- Replace the batteries in your smoke and carbon monoxide detectors. Don’t forget to test the detectors by pressing the “test” button.
- Get your heating system inspected. (hint: the earlier the better, to avoid the last-minute rush) Replacing belts is much less expensive than a major repair, like a blown motor, and doing it before you need your heat helps to avoid a true “three dog night” when you least expect it.
- Reverse your ceiling fans, if you have them. Energy Star recommends reversing the motion of your fans so they are spinning in the clockwise direction. This will cause a gentle updraft and causes the warm air near the ceiling down into the occupied space.
- Inspect your attic and basement for insulation and critters. Make sure your insulation doesn’t cover vents in the eaves, and definitely check for birds or rodents. Install screens for attic vents to keep out those unwanted guests. If your insulation is starting to fall, handle with gloves and consider stapling back in place.
- Be prepared, get your cold-weather essentials now. Don’t wait until the first snowfall to get a new shovel or snow blower. Buy one now. Make sure to grab salt and ice melt while you’re there! (The pet safe kind can be tough to find in January.)
Spending a little bit of time and money now will save you money down the road, and may prevent the worst case scenarios from happening during the coldest time of the year.0 Comment(s)
Halloween is one of my favorite holidays, I especially enjoy helping my kids decorate the house and select the perfect costume. It’s one of those fun holidays where you can dress up, scare everyone you know and eat enough treats to put yourself into a candy coma.
It’s also important to make sure everyone is safe while trick-or-treating, especially after dark. In an effort to keep my kids safe and my stress to a minimum, I follow a few common sense tips.
Safe Costumes: Costumes should be light or brightly colored and have reflective tape so that kids are visible at night to drivers while walking from house to house. Whether homemade or store bought, I put reflective tape on my kids costumes. If you’re creative (unlike me) you can use the reflective tape to make fun designs.
Avoid Masks: If at all possible avoid having your kids wear a mask; they can limit a child’s peripheral vision. Instead of a mask consider having them wear face paint or makeup. Test face makeup for allergy issues before putting it on your child’s face. It’s not always possible to avoid Halloween masks. This year my son is going trick-or-treating as a Power Ranger, the mask makes the costume. I decided to make the eye holes larger to help him see well. I’ve also had several conversations reminding him that he will need to be extra careful while wearing the mask. His typical response? “I know Momma!” along with an eye roll. When he has the mask on I won’t be able to see those.
Accompany Minors: Young children should be accompanied by an adult, while older kids who want to go out unsupervised should go in groups and let parents know exactly where they are going, who they are going with and when they will return. This year I will be taking my two younger children out trick-or-treating while letting my oldest go out by herself for the first time (with a known and accepted group of friends). I’ve given her a cell phone with a GPS tracking app, in case of an emergency.
Check the candy: You should ALWAYS examine your child’s candy before letting them consume any of it. It’s important to make sure candy is intact, unspoiled, and nothing looks suspicious. Throw out any homemade treats from strangers, it’s best to be safe. This is also a good time to ration how many pieces of candy they can have each day. As I sort my kid’s candy, I’ve on occasion been known to sneak a few pieces; it’s a great way to help ration the pieces, right?
As the parent of three kids I’ve found these four tips extremely useful in ensuring all of my kids have a frightfully fun and safe time trick-or-treating. This year I think I’ll dress up too and get in on the fun.