Credit Score Basics

I would like to thank all the members who have contacted me through the Ask Gene blog about financial issues and situations that are important to you. Recently, I have had several discussions about credit scores. As the economic situation in our country continues with uncertainty and legislative changes and restrictions to lending are pending, folks are concerned about how this all will impact their credit score. In fact, a recent Associated Press article noted that more than 25% of all Americans now have a credit score of 599 or less. With your credit score affecting everything from your mortgage loan to the cost of your auto insurance policy, more folks are paying attention to this important number now more than ever before.

For the next several blogs, I'd like to give you some basic facts about credit scoring that highlight its importance to your financial health, gathered from several sources, including vendors, the web, and years of experience in the industry. Put simply; credit scoring is a system of statistically analyzing credit reports that provides a simple three-digit score comparing an individual's past and current credit performance to that of similar consumers. Your credit score provides lenders, or other potential creditors such as insurance companies or landlords, a quick, fairly objective way to assess your creditworthiness or likely ability to pay back a loan or mortgage or pay the rent. Knowing your credit score (along with regularly checking your credit report) is a smart thing to do.

So, what is a credit score?

A credit score is often called a FICO score, after the Fair Isaac Corporation, which developed the most widely used analytical system and software. It may also be called a credit rating. Although individual credit bureaus or credit reporting agencies (CRAs) adapt, add to, or modify Fair Isaac models to suit their needs and provide their own credit score, most use the FICO score or system as a foundation.

Equifax, Experian, and TransUnion, are the three big CRAs. In 2006, these three developed a new credit scoring method called VantageScore, a competitor to the established FICO score. Although the VantageScore is now available to consumers as well as lenders, the FICO score is still the predominant and standard scoring system used and what I will reference in these blogs.

Why do lenders use credit scores?

one of the major reasons is that it's quick! But as the Federal Trade Commission (FTC) points out, credit scoring is based on a wide pool of actual data and statistics of persons using credit. As a result, most experts consider it more reliable than "subjective or judgmental methods." It's a way of leveling the playing field, if you will, for lenders or potential creditors to evaluate your creditworthiness.

What's a good number?

Generally, the higher your credit score, the better. Most credit scores, based on the FICO model, have a range of approximately 350-850. The best scores, indicating high creditworthiness, are from the mid 700s and higher. At Rogue, members with a credit score of 730 or above get our very best rates. Credit scores below 620 are considered poor. Most people fall in the 600s and 700s. Different lenders will give various scores different weights, but typically scoring 680 or above puts you in the category of an average or better credit risk.

I hope that this information and the links I have provided have been helpful. In the next blog, I'd like to continue discussing credit scores, the contributing factors taken into account when creating the score and how you can obtain your score.

Living Local…it’s a ROGUE thing!

Each year, Rogue Credit Union is proud to play a part in helping to raise funds for a specific medically related project through Credit Union for Kids. This year’s project is the purchase of a Hugs Protection System for the Pediatrics unit at Rogue Valley Medical Center (RVMC).



Rogue Credit Union will be selling bottled water for $1 at Movies in the Park all summer long – all proceeds will go towards the Hugs project. There are six movies left, so be sure to check out the Rogue booth at Bear Creek Park on Saturday evenings and help support this local cause. You also may have noticed displays of sunshine and tree cutouts in the branches – each one of these cutouts represents a contribution made to this project. We appreciate each person who has made a donation to-date and encourage everyone else to do so before August 25. This is a great way to show your support for our community and give peace of mind to parents with little ones going through a difficult situation.



The Hugs Protection System is designed to prevent children from being removed from RVMC without authorization. Every child wears a Hugs tag on the ankle or wrist, and every exit point of the unit is electronically monitored to detect the tags. This means staff and family can move children freely within the protected zone, but no one can remove a child without Hugs alerting hospital staff. If a tag in close proximity to an open exit is detected by the door monitors, an alarm occurs. The control PC shows the tag ID number and indicates the exact location on a floor plan map of the facility.



Credit Union for Kids was established in 1986 when seven credit unions in Oregon and SW Washington set out to make a difference in the lives of children. In staying true to the "people helping people" philosophy that credit unions are built upon, these seven credit unions began raising money for Credit Unions for Kids.



Today, over 60 credit unions in Oregon and SW Washington participate in this nonprofit collaboration engaged in fundraising activities to benefit Children's Miracle Network affiliated children's hospitals. Here in the Pacific Northwest, Credit Unions for Kids benefits Doernbecher Children's Hospital, and the pediatric units of Sacred Heart Medical Center in Eugene and Rogue Valley Medical Center here in Medford. More than $10.6 million dollars have been raised for the children in the Pacific Northwest since 1986.



Thank you for giving to your local community!

Independence Day

This is one of my favorite times of the year… Independence Day! I love it because it's a day of picnics and patriotic parades, a night of concerts and fireworks, and a reason to fly the American flag. This year Independence Day falls on a Sunday. On this day in 1776, the Declaration of Independence was approved by the Continental Congress, setting the 13 colonies on the road to freedom as a sovereign nation. There are so many celebrations happening throughout Southern Oregon…too many to list, so here’s a website that gives you information on several opportunities in the Rogue Valley including the Red, White, and Boom fireworks celebration in Medford at Harry and David Field. Click here for all the details. This event is made possible by the generous donations of several local businesses including Rogue Federal Credit Union.
Just for fun, I also came across these interesting facts on the Census Bureau and thought I’d share them with you.

The Fourth of July 2010

In July 1776, the estimated number of people living in the newly independent nation was 2.5 million.
The nation's estimated population on this July Fourth is 309.6 million.

Flags

In 2009, the dollar value of U.S. imports of American flags was $3.0 million. The vast majority of this amount ($2.5 million) was for U.S. flags made in China. $920,277 was the dollar value of U.S. flags exported in 2009. Mexico was the leading customer, purchasing $333,882 worth.

Fireworks

The value of fireworks imported from China in 2009 was $209 million, representing the bulk of all U.S. fireworks imported ($217 million). U.S. exports of fireworks, by comparison, came to just $42.9 million in 2009, with the United Arab Emirates purchasing more than any other country ($14.5 million).

Fourth of July Cookouts

The chance that the hot dogs and pork sausages consumed on the Fourth of July originated in Iowa is more than 1 in 4. The Hawkeye State was home to 18.9 million hogs and pigs on March 1, 2010. This represents more than one-fourth of the nation's total. North Carolina (9.1 million) and Minnesota (7.2 million) were the runners-up. The odds that your side dish of baked beans originated from North Dakota are about 1 in 3. ND produced 34 percent of the nation's dry, edible beans in 2009. Another popular Fourth of July side dish is corn on the cob. Florida, California, Georgia, Washington and New York together accounted for 66 percent of the fresh market sweet corn produced nationally in 2009. Potato salad and potato chips are popular food items at Fourth of July barbecues. Half of the nation's spuds were produced in Idaho or Washington State in 2009.

So, whether you take to the streets or your backyard this fourth, be safe and enjoy good food, good friends, and this great place we call home – get out and LIVE LOCAL! Oh, and don’t forget the sunscreen – summer has finally arrived!

As a reminder, all Rogue branches and drive-ups will be closed on Monday, July 5th in observance of Independence Day.