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About The independent. (Vernonia, Or.) 1986-current | View Entire Issue (Feb. 3, 2011)
The INDEPENDENT, February 3, 2011 How – and why – you need to understand your credit score by Jason Alderman (www.practicalmoneyskills.com) If you’ve tried to take out a loan or open a new credit ac- count recently, you know that the days of easy credit are long gone. Lenders, insurers, land- lords and even some employ- ers are more diligently scruti- nizing your credit history to see if you’re a worthwhile risk. A low credit score can cost a small fortune over the course of a lifetime. What often happens to people with poor, or even fair, credit scores is: • It’s harder to qualify for a mortgage, you’ll need a bigger down payment and you’ll pay a higher interest rate, which adds up over time. Someone with poor credit might pay an extra $100,000 in interest over the life of a typical 30-year, $300,000 mortgage. • Similarly, someone with a poor score might pay an addi- tional $10,500 in interest on a 60-month, $25,000 auto loan. • Credit card interest rates can be 10 or more percentage points higher and credit limits are typically much smaller. • Although credit scores aren’t factored into federal stu- dent loan interest rates, they are with private student loans, often resulting in rates several percentage points higher. Here are a few key concepts: Credit bureaus. Each major credit bureau – Equifax (www.equifax.com), Experian (www.experian.com) and Tran- sUnion (www.transunion.com) – compiles information from lenders who’ve extended you credit, tracking the number and types of credit accounts you use, how long they’ve been open and whether you’ve paid your bills on time. Credit report. Upon request from you or a potential lender (and, increasingly, employers and landlords), bureaus as- semble a report showing your credit history to date. Among other things, it contains a sum- mary of open and closed ac- counts, outstanding balances, recent inquiries and negative items (late/missed payments, bankruptcy, tax liens, etc.) Credit scores. When you ap- ply for new credit, the lender will ask a credit bureau to com- pile a three-digit credit score, based on information in your credit report – essentially a snapshot of your credit profile at that moment. The lender uses your credit score to sup- plement its own selection crite- ria to determine whether you are a worthy credit risk. Five factors are used to de- termine your credit score: pay- ment history (usually around 35 percent of your score), amount owed (30 percent), length of credit history (15 percent), newly opened credit accounts (10 percent), and types of cred- it used (10 percent). These five categories may be weighted differently depending on your individual circumstances. You can order one free cred- it report a year from each bu- reau. (Order through the gov- ernment-authorized www.annu alcreditreport.com; otherwise you’ll pay a small fee.) This helps you identify bad credit behavior and spot fraudulent activity or errors before they damage your credit. A good strategy is to rotate ordering a free report from one bureau every four months; that way, you’ll keep year-round tabs on what’s being reported about you. You can also order individual credit scores for around $15. Many good resources share what you can do to protect – or repair – your credit scores, in- cluding the Credit Education center at www.myfico.com, the Federal Trade Commission’s Credit & Loans page under “Consumer Protection” at www.ftc.gov, and What’s My Score, a financial literacy pro- gram run by Visa Inc., which also features a free FICO Score Estimator that can help you approximate your score (www. whatsmyscore.org). Celebrate Valentine’s Day Monday, February 14th Page 5 County woman honored by Oregon Farm Bureau At the Oregon Farm Bu- reau’s 78th State Convention, OFB President Barry Bushue presented Marie Gadotti, vice president of Columbia County Farm Bureau, with the Service to Agricluture award for her tire- less efforts in addressing the problem of migratory geese damage on farmers’ fields. “Marie has spent years tack- ling the goose issue, a chal- lenging problem that affects growers all over the state,” said Bushue. “Her work has in- volved perseverance, long odds, and lots of outreach and collaboration across numerous levels of government.” Besides giving hours of testi- mony to the state legislature, in- terviews to the media, and let- ters to the editor, Gadotti serves as chair of OFB Goose Depre- dation Committee and also on the state-appointed Oregon Goose Control Task Force, which submitted 14 recommen- dations to the Oregon Depart- ment of Fish and Wildlife last fall on how to address the issue. “The Distinguished Service Award was established to rec- ognize outstanding efforts in the interest of family farmers and ranchers, and few are more deserving of this honor than Marie,” said Bushue. “She has been a consistent, depend- able leader dedicated to the ad- vancement of Oregon agricul- ture.” The state’s largest general farm organization, Oregon Farm Bureau (OFB) is a volun- tary, grassroots, nonpartisan, nonprofit organization repre- senting the interests of the state’s farmers and ranchers in the public and policymaking arenas. Bill submitted to create microtax credit for rural businesses by John Crabtree, Center for Rural Affairs In order for Oregon’s rural cities and small towns to con- tribute fully to the nation’s eco- nomic recovery, we must en- able small, mainstreet busi- nesses to build a better future for themselves, their communi- ty, state and nation. Representative Wally Herg- er (R-CA) and Representative Ron Kind (D-WI) have intro- duced legislation to do just that. Their Rural Microbusiness In- vestment Credit Act (HR 5990) is the first federal tax credit de- signed to meet the needs of small business in rural areas. It would provide a 35% tax credit – up to $10,000 – to start or ex- pand owner-operated busi- nesses with five or fewer em- ployees. In rural America, creating your own job is a way of life. During recession, the reluc- tance of large businesses to add workers makes small busi- nesses and self-employment even more important. During the 2000-2003 recession, mi- croenterprise employment in Oregon grew by five percent, while larger firms were still shedding jobs. Microenterprise led the economy out of reces- sion. It can happen again, but entrepreneurs need and de- serve the support of federal policy as much as larger busi- nesses. The rural micro tax credit is tailor made to encourage mi- croenterprise investment dur- ing recession. Qualifying busi- nesses could receive refunds on prior year returns if they are not making enough in the cur- rent year to owe taxes, which is critical during tough times or during startup, when most are lucky to break even. A refund of prior years’ taxes is an invest- ment incentive that works in good years and bad, for new or established businesses.
