For Members Age 18 - 25 , The GEN X Club:
Reliance Federal Credit Union is proud to offer the Generation X Club. This club is for RFCU members who are between the ages of 18 and 25.
What does this mean for you?
Call 610-783-5229 for details.
Credit Scores Are More Important Than Your SAT Score!!!
Credit scores, also called FICO scores, are arguably one of the most important pieces of information in your financial life and the vast majority of Americans don’t know their score. Lenders, landlords, insurers, utility companies, and even employers scrutinize this rating, which sums up all of the information in your credit reports with three digits ranging from 300 (worst) to 850 (best). FICO scores are like your GPA of borrowing history. Your age, marital status, where you live, length of employment, salary, and debt ratio have nothing to do with your individual score.
The credit score system has been around for 45 years and it is credited with making lending less discriminatory and access to credit easier and faster than ever. If your score is over 700, you will qualify for the best rates in the marketplace, because the odds are 288-1 for a 90 day delinquency. If your score is below 600 you are more than likely going to pay more for that loan, as the odds drop to 2-1 for a delinquency. On a $30,000, six year car loan, you could be talking about paying $5,000 to $9000 more in interest charges multiplied by the number of cars in your lifetime. In this example, improving one’s credit score by 100 points can make a huge financial impact. And it doesn’t stop there. The rates you pay on your mortgage loan, credit card, insurance premiums, or whether you qualify for a job may all be based on your credit score. Imagine getting declined for a new job because your score is too low.
Your credit score is based on data submitted to the credit reporting agencies and can be grouped into five categories, weighted to their importance.
35% of your credit score is based on Payment History, and regardless of the dollar amount, it will take 24 months to restore credit with just one late payment. The good news is that over time, even a bankruptcy will not drastically impact your score providing payments to debtors are made on time.
30% is based on your credit card Capacity. Maxing out your credit cards or having too many with high balances will hurt your score. Having multiple cards and showing the discipline not to use them will give you the highest score. If you have credit card debt, moving it to installment debt can help your FICO score.
15% of the FICO score is based on the Length of Credit. It does take time to develop a history of on-time payments. Start early in life with secured loans or a small credit card. If your parents allow you to become an authorized user on their credit card, your FICO score could benefit from this.
10% of your score is determined by the Accumulation of Debt in the last 12 – 18 months. Shopping for credit excessively or opening up numerous trades in a short time period will hurt your score.
10% is based on your Mix of Credit. Installment debt is always better than revolving debt and utilizing finance company loans can lower the score.
Important Information for College Students and Their Parents Regarding Credit Cards
College students today have even greater access to credit cards than ever before. In fact, 67% of undergraduates have at least one card and 25% have four or more. A 1998 survey found that the average balance was $1,879, and that 10% had more than $7,000 in credit card charges.
The best thing you can do is give your student some basic consumer education. Explain the importance of interest rates and what all the fine print means to their pocketbook. Once they understand the basics, they can make more informed choices about credit cards and won't be lured into using cards with high interest rates and fees.
Students should be encourages to review alternatives with their parents before applying for credit cards. RFCU offers students many options such as secured cards, parents' co-signer cards, as well as their own credit. We also offer our Check Card which allows students to make purchases wherever VISA is accepted with the funds available in their RFCU checking account.
Once the student carries a card, it is important to for them to us it wisely. Some college students make mistakes once they get a card. Out with friends, they pick up the tab on their credit card, collect each person's share in cash and then spend the cash rather than pay off the bill. Another common mistake is to rack up a big balance and then pay the required minimum balance - never getting out of debt. Sometimes they are afraid to confess that they can't make payments, and don't realize that late payments can stay on their credit report for years.
Here's some advice for students ready to charge
By working closely with them, parents can help their young adults establish a solid credit record and learn to be responsible with finances. Don't hesitate to contact us at 610-783-5229 or 800-458-7004 if you have any questions or need assistance.
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