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.