The Bottom Line
Small business is important to Central Oregon, and to Mid Oregon. Find tips and resources for business, and information about Mid Oregon’s commercial services and business members.
How do you maintain good credit?
How do you continue to maintain good credit? Your credit report acts as your financial references when you apply for any new credit. The only way to maintain a good credit history is to use credit wisely.
Tips for Building Credit
Following are 10 tried and true tips for building credit:
1. Create a spending plan and live within it. Credit should not be used to live beyond your means. Borrowing now means paying back from future earnings in that future budget.
2. Provide complete, accurate, and consistent identification on your credit applications. This information helps set up your credit history correctly from the beginning, ensures that your new accounts will be matched to the correct report, and minimizes the chance that your credit file will be incomplete.
3. Pay your bills on time, all of the time. Late payments, called delinquencies, negatively affect your ability to get credit since they indicate a stronger likelihood that you will make late payments again or will be unable to pay your debts in the future. 35% of your credit score is determined by your payment history.
It Pays to Have Some Credit
4. Have some credit, but not too much. Having no credit history is almost as bad as having a negative credit history, and you only need a few accounts reported to the credit reporting companies to demonstrate credit management.
5. Have a mixture of credit types. It is good to have a history of repaying an installment loan, but a revolving account demonstrates more clearly that you can responsibly manage credit. 10% of your credit score is built on the types of credit you currently have in use.
6. Keep credit card balances low. Keeping your balances low compared with credit limits shows that you aren’t tempted to charge more than you can pay. By charging a small amount on at least one card and paying the balance on time, you will show that you can handle larger amounts of available credit.
Closing Credit Accounts Isn’t Always Good
7. Use caution when closing accounts. Closing an account isn’t always a good thing. It can result in an increase to your balance-to-limit ratio, making you appear to be an increased credit risk. Another key factor of your credit score is how much of your capacity are you using? Closing accounts will reduce your capacity by the amount of the credit limit closed. 30% of your score is dependent upon using a little, but not all of your potential borrowing capacity.
8. Be aware of your debt-to-income ratio. Mortgage lenders consider your monthly payments compared with your monthly income. As a practical matter, higher levels of debt compared to income increases stress.
9. Demonstrate stability. Some creditors consider your length of employment, length of residence, whether you own or rent, and if you have any savings in making credit decisions.
10. Contact your lenders if you fall behind on your payments. Many lenders will work with you to set up a different payment schedule or interest rate. Whatever you do, keep the channels of communication open.
How To Get Your Credit Report
You can order your credit report free. Each year, you can request one credit report from each of the major credit bureaus without charge. In some situations you can request them more frequently. To learn more, and order, visit www.annualcreditreport.com.
Getting and maintaining a good credit score takes consistent effort. It’s well worth it, and will pay benefits for a lifetime.
Americans Unable to Cope in an Emergency?
From the National Endowment for Financial Education® (NEFE®), April16, 2018
1 in 3 Americans are Financially Fragile
Research funded by the National Endowment for Financial Education® (NEFE®), and conducted by the Global Financial Literacy Excellence Center at the George Washington University, identifies a widespread problem affecting millions of Americans. The recent study finds one in three Americans are financially fragile, meaning they are unable to cope with emergency expenses in a short time frame.
Using survey data and focus group discussion findings, researchers assessed responses focused on financial preparedness—specifically respondents’ confidence that they could come up with $2,000 within a month’s time if needed for an emergency. Individuals answering that they certainly could not or probably not come up with that amount of money in that timeframe are considered financially fragile. The analysis found that one in three (36 percent) respondents in the 2015 National Financial Capability Study (NFCS) fall within this vulnerable group.
“It’s inevitable that a person will experience a financial setback or an income disruption during their lifetime,” says Billy Hensley, Ph.D., senior director of education at NEFE. “If you’re getting money back from Uncle Sam this tax season, consider investing this windfall toward starting or growing an emergency savings fund.”
Financially fragile Americans could not cover the cost of a midsize shock, such as a medical bill, car or house repair within a reasonable amount of time, in the case of this study one month. This number has dropped since 2009 during the Great Recession, when nearly 50 percent of working-age adults were considered financially fragile. Still, the prevalence of unsteady personal finances is concerning.
What causes financial fragility?
Researchers investigated the causes of financial fragility and found three main factors: high debt, lack of assets, and low financial literacy.
“Financial fragility does not mean simply lack of precautionary savings,” says Annamaria Lusardi, Ph.D., academic director of GFLEC. “Both sides of households’ balance sheet matter; heavy indebtedness can also make individuals financially fragile.”
Higher income does not always protect against financial fragility.
Not surprisingly, the majority of financially fragile people are in the low-income bracket. Yet almost 30 percent of middle-income households (annual income in the $50–75k range) and 20 percent of high-income households (annual income $75–100k) also are considered financially fragile.
“The contrast of a $2,000 emergency expense in comparison to higher-income levels is striking,” says Hensley. “Among lower-income individuals and families, most rely, due to the limits of financial liquidity, on borrowing from their network of friends and family or working multiple jobs. Unfortunately, financially fragile households are less likely to have a precautionary safety net.”
Financial fragility and retirement.
Financial fragility is shown to make people vulnerable not only in the short term, but also in the long term, as financially fragile individuals are less likely to plan for their retirement.
Fragility impacts all age groups. Financial fragility does not seem to decrease with age. People of all age groups are financially fragile at comparable levels, despite the expectation that people earn more money as they get older.
Education and gender decrease fragility risk. The higher the education level, the lower the probability of being financially fragile. Also at risk are women, a substantially higher proportion of working-age women are financially fragile relative to men.
“Financial fragility is a multifaceted problem facing a wide representation of the American population,” says Hensley. “We urge everyone to consider the unique factors in their life and prioritize their finances accordingly to work toward long-term financial goals.”
“Initiatives such as incentivizing short-term savings and requiring financial education in school and the workplace can be important steps toward increasing financial resilience,” Lusardi adds.
For more on the financial fragility research, click here.
Study Details
This research analyzed data from two national surveys—the 2015 National Financial Capability Study (NFCS) conducted by the FINRA Investor Education Foundation, and the 2015 Survey of Household Economics and Decisionmaking (SHED) conducted by the U.S. Federal Reserve Board, as well as data collected from focus groups. The study was led by Annamaria Lusardi, Ph.D., academic director of the Global Financial Literacy Excellence Center (GFLEC); Andrea Hasler, Ph.D., assistant research professor in financial literacy at GFLEC; and Raveesha Gupta and Noemi Oggero, research associates at GFLEC.
About the Global Financial Literacy Excellence Center (GFLEC)
Founded in 2011 at the George Washington University School of Business, the Global Financial Literacy Excellence Center (GFLEC) has positioned itself to be the world’s leading center for financial literacy research and policy. Through rigorous scholarship and research, wide-reaching education, and global policy services, the Center works with partners in Washington, D.C., throughout the United States, and across the globe to raise the level of financial knowledge. For more information, visit www.gflec.org.
About the National Endowment for Financial Education (NEFE)
NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.
President’s Message: Growth and Milestones
Although we’re not even midway through 2018, the Mid Oregon team is pausing to reflect on some significant growth milestones we’ve achieved together.
30,000 Members, One Billion Dollars Loaned
We’re happy to report that our total membership has passed the 30,000 mark. In addition, we crossed another threshold recently—granting a total of $1 billion in loans since our institution was founded. We know these milestones are a reflection of our community’s growth and our members’ preference for a local place to do their financial business.
We also know it has a lot to do with members like you, who recommend Mid Oregon to your friends, neighbors, and colleagues. We take the trust you place in us very seriously, and we work hard to continue to earn it. This growth strengthens our cooperative and allows us to extend new and better services to every member.
One example of this is rolling out right now. You’ve been asking for a full-featured Mobile Banking App, and we’re pleased to announce that it’s ready! In addition to mobile deposit, our new mobile app allows you to manage your accounts on the go by viewing balances, making transfers, and even paying bills.
Celebrating Special Anniversaries
We also have a lot of special anniversaries to celebrate—the second year since our La Pine branch opened, the one-year anniversary of the opening of our Sisters branch, and one of my favorites—the 20th anniversary of our Redmond branch. It’s hard to believe that only 20 years ago, we were stretching our capacity to operate two branch locations, and now we’re managing seven locations with more than 100 employees!
We couldn’t do it without a great team. By promoting from within and hiring new teammates who show up ready to foster our culture of excellent member service, community responsibility and continuous learning, we’re poised to embrace whatever our members need in the future.
We’re grateful for the opportunity to help you and your family achieve your financial dreams. Thank you for your membership!
Bill Anderson, CEO
Mid Oregon Credit Union