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What is a credit report?

A credit report is a record of your credit activity and current credit situation such as loan repayment history and the status of your credit accounts.

Lenders, insurers, employers and others may obtain your credit report from a credit bureau or consumer reporting agency to determine whether you are a good candidate.

Credit reports often contain:

• Personal identifying information: Name, address, full or partial Social Security number, date of birth and employment information
• Your past and existing credit: The amount you owe creditors, terms of your credit and your payment history
• Your public record: Court judgments against you, tax liens against your property, whether you have fi led for bankruptcy or have unpaid bills which have been turned over to collection agencies
• Inquiry information: Companies make a credit inquiry anytime you apply for credit

What is a credit score?

A credit score is a three-digit number that estimates how likely you are to repay borrowed money. The most commonly used credit score model, FICO, has a range of 300 to 850.

These factors influence your credit score:

• Payment history (35%): Paying your bills on time makes a big impact on your overall credit score, accounting for up to 35%.
• Outstanding debt (30%): Keeping balances well below credit limits and paying off those balances can improve your score.
• Types of accounts (10%): Another important factor is demonstrated success in managing a mix of credit accounts, i.e., credit cards, retail accounts, installment loans and mortgage loans.
• Length of credit history (15%): In general, a longer credit history will increase your credit score, because it is easier for creditors to see if you’ve been making payments responsibly.
• New credit (10%): New accounts lower the average age of your existing accounts, which can negatively impact your score. Also, opening multiple accounts in a short period of time is considered “a risk” by reporting agencies.

source: myfico.com/credit-education/whats-in-your-credit-score

Learning and taking steps to make changes can improve your score and stop bad credit from holding you back!

Want to know more? Call or visit your local TCU service center or book an appointment when it's convenient for you.

This document is for educational purposes only and doesn’t constitute tax, legal or accounting advice. The following is general information, not recommendations. Please consult with an attorney or tax professional for guidance.

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Create a Budget

Developing a budget based on your monthly income, expenses and savings is the first step.

• Track your income and expenses to establish financial goals by reviewing your most recent monthly statements. Knowing how you spend your money can help you adjust or eliminate non-essential purchases.
• Use the 50/30/20 budget—spending roughly 50 percent of your after-tax dollars on necessities, no more than 30 percent on “wants,” and at least 20 percent into savings or paying off debts.
• TCU’s Budget Calculator can help you develop a roadmap to make your hard-earned income work for you.
• Stick to your budget plan over time to help reduce debt, cut back on impulse purchases and increase savings for emergencies, large expenses and other financial goals.

Even a small, regular contribution toward your retirement has the potential to grow into a large nest egg.

• Compound interest (earning interest on interest) over time has a tremendous impact on your long-term retirement savings. Automate the process. If your employer offers a 401(k) plan, take advantage of it, along with the pre-tax savings on your earnings.
• Use a health savings account (HSA) to contribute. You can contribute pre-tax dollars, pay no taxes on earnings, and withdraw the money tax-free now or in retirement to pay for qualified medical expenses.

It is important to build up your savings to cover emergencies and to plan for your future. As a general rule, you should maintain enough savings to cover three to six months of your regular expenses.

• Establish a separate savings account for each of your savings goals—contributing a certain amount each pay period. TCU makes it easy by offering Choice Savings accounts. You can open multiple savings accounts and give them names that represent your financial targets (like emergency, insurance or vacation) making it easy to see when you’re closing in on your goals.
• Set up automatic transfers from your checking to each savings account each pay period to stay on track.
• Use TCU’s Round-Up Savings to grow your savings automatically. Every time you make a purchase with your TCU Debit Mastercard®, the purchase amount is rounded up to the nearest dollar and the difference is transferred from your checking to your savings account. You will be surprised how a little change here and there adds up.

Want to know more? Call or visit your local TCU service center or book an appointment when it's convenient for you.

This document is for educational purposes only and doesn’t constitute tax, legal or accounting advice. The following is general information, not recommendations. Please consult with an attorney or tax professional for guidance.