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Sioux County Index-Reporter
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February 17, 2010     Sioux County Index-Reporter
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February 17, 2010
 

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Is your credit score costing you money? In these uncertain financial times, even those with excellent credit his- tories may have trouble getting a mortgage or other type of loan. That's why it's important to know your credit score and the effect it may have on your checkbook, according to the Iowa Society of Certified Public Accountants. Why it matters Your credit score is based on your financial situation and your past history of managing your credit. Companies use it to decide whether or not to extend you credit or a loan. Many people understand that lenders check credit scores when an individual applies for a mortgage, a credit card or for a car or student loan. You may not be aware, however, that your score can also be important when you try to rent an apartment, since more and more landlords want access to this information to help gauge whether tenants will keep up with the rent. In addition, a bad credit score could mean higher car insurance pre- miums and an inability to sign up for certain cell phone plans. Finally, you may be surprised to learn that even some employers may check your credit score to get a better sense of the character and reliability of the person they're planning to hire. The facts behind the score There are three national cred- it bureaus: Equifax, Experian and TransUnion. Each one has its own scoring method, but they are all typ- ically based on one model, often known as FICO. Your credit score generally can range from 300 at the low end to 850 at the high end. It is calculated based on a number of factors. The most important is your payment history, including late payments and bank- ruptcies. The score also-takes into account how recently any problems have hap- pened, so a payment problem several years ago should carry less weight than a recent one. Another factor is your current debt situation, including how much debt and how many credit cards you have. The credit bureaus also con- sider the length of your credit his- tory and whether you have long-term loans or short-term installment debt. In dollars and cents What's the actual impact that a weak credit score will have on your finances? The FICO web site (www. myfico, com) provides some answers based on recent interest rates. The monthly payment on a $25,000, 36-month auto loan might be about $763 for someone with a high credit score in the 720 to 850 range because they would be charged a low interest rate since they are con- sidered a good credit risk. Conversely, a borrower in the 620-659 range would pay around $814 per month and someone with a low score between 500 and 589 could end up paying around $868. That's $100 more per month than someone with the best credit score. Borrowers with a low credit score seeking to take out a 15-year home equity loan or a 30-year mortgage could pay several percentage points more in interest on the loan, which could translate to hundreds of dollars a year, depending on the size of the debt. Consult your CPA What's your credit score? Everyone is eligible to receive a free credit report annually from each of the three major credit rating bureaus. To learn more, go to www.annualcre- ditreport.com or call 877-322-8228. It's a good idea to check your report regularly to monitor your score and to ensure you haven't been the victim of identity theft. Fraudulent use of your credit cards or identity can also lower your credit score. Be sure to turn to your local CPA for answers to any questions you may have on managing your debt or other financial issues facing your family. To access "Find a CPA" on the web, go to www.FindAnlowaCPA.com. Income tax preparation for individuals, farmers, partnerships, and corporations. Financial statement preparation including compilation , review and auditing services. Payroll and sales tax accounting. Financial advisory service. Estate and trust tax preparation. Computer consulting. Estate planning. CALL TODAY FOR AN APPOINTMENT KROESE KR()ESE, P.C. CERTIFIED PUBLIC ACCOUNTANTS 540 N. Main Ave. Sioux Center, Iowa 712-722-3375 www.kk-cpa.com 609700 ATTENTION MEDICARE BENEFICIARIES You still have until March 31st to get a monthly plan premium from Coventry Health Care. Don't miss the deadline! CALL ME TODAY TO LEARN MORE. Mark Lorenzen I aeoendent Agent 712-539-2141 1-888-788-4010 M-F 9 a.m.- 5 p.m. A Coordinated Care Plan with a Medicare Advantage contract. The agent listed is an independent licensed insurance agent/broker and is not an employee of Coventry Health Care, Inc. or its affiliates. Please contact agent/broker for more information. More information and enrollment by phone is also available through Coventry customer service at 1-877-563-5096 (TTY/TDD 1-888-788-4010 for the hearing impaired), 8 a.m. to 8 p.m., seven days a week. (tCOVENTRY T Health Care Tle benefit information provided herein is a briel summary, but not a comprehensive description of available benefits. Additional information about benefits is available to assist you in making a decision about your covera0e. This is an advertisement; for more information contact the plan. Exclusions and limitations may apply, please contact the plan Ior more detail. MOOd3 1OMAPD_473_Obkrad (0110212010) 61057 Steps to repair your credit score o you know your credit score? A low credit score could be costing you money. People with poor scores usually pay higher interest rates, which translates into larger monthly payments for a mortgage or an auto or student loan. Poor scores can also cause you problems when renting an apartment, signing up for a cell phone plan, or even getting the job you want. Luckily, accord- ing to the Iowa Society of Certified Public Accountants, there are steps you can take to try to improve your score. Setting the score Your credit score is calculated by three nation- al credit bureaus: Equifax, Experian and TransUnion. The scores generally range from 300 at the low CREATIVE ASSET CONSULTANTS INC. Personal & Business Financial Planning Ruth M. Nester //vestment Advisor Representative 712-472-2644. 107 N. Story St. Rock Rapids, IA 51246 e-maih rnester@ksifa.com Registered Representative of and offers securities through Kovack Securities Inc. Member FINRA/SIPC Advisory Services offered through Kovack ,Advisors, Inc. Dwight W: Moats W. Main St. Cherokee, IA 51012 712-225-5136 612188 The road map for YOUR FINANCIAL FUTURE STARTS HERE. Schedule your flee State Farm Insurance and Financial Review today, logether we I1 prioritize your needs and help you plan )'our financial future. Thomas A Menage, Agent 208 1 st Avenue Rock Rapids, IA 51246 Bus: 712-472-3358 www.tommenage.com LIKE A GOOD NEIGHBOR  STATE FARM IS THERE. Providing Insurance and Financial Services f, onsu t yQur lax or e0al adv sat o spec fie adv ce P036324 State Farm * Home Offices: B]oGmington, [I 11/04 A IIII PeoplesBank Trust Services Your famUy, our responsibility. When you choose the Peoples Bank Trust department, you choose: Expertise in estate planning, retirement planning, investments real estate management, and taxes Commitment to you and your needs Periodic reviews of your overall situation and investments Sympathetic understanding to avoid family conflict Security in the knowledge that your assets will pass on as intended Cost Savings by avoiding probate Financial privacy With a tnlst managed through the Peoples Bank Trust department, you can be assured that your assets will be dLpersed as you intend. Peoples Bank Trust Department 1-877-722-0101 Peoples Bank Lester, Iowa 1-877-478-4411 end to 850 at the high end. The score you get from each credit bureau may be slightly different, but they should all fall within the same range. The credit bureaus consider several factors when they determine your credit score. If you've had many late payments in the past or have filed for bankruptcy at some point, those facts will lower your credit score. However, those problems will carry less weight if they occurred in the dis- tant past, rather than the last year or so. The bureaus will also examine how much out- standing debt and how many credit card accounts you have. The length of your credit history is important, too, so a recent graduate with a brand new credit card may get a lower score than someone with years of good pay- ment history. Raising your score What's the best score to have? Most people who score in the mid-700 range or higher will likely qual- ify for the loans they want without having to pay a premium for credit. But how do you raise your score if it's not at that level? The first and most important step is to start paying your bills on time. Your payment history is a critical factor in calculat- ing your score, so improv- ing your payment hab- its can have the greatest impact. You should also make an effort to lower the amount of debt that you have outstanding. If you've charged up to the maximum on every credit card you own, that will lower your score. CPAs advise that you use no more than 25 percent to 30 percent of your. avail- able credit. That shows the credit bureaus that you're able to manage some debt, but that you're not over- spending with the cards you have. Check your credit report It's a good idea to review your credit report with the three credit bureaus regularly to make sure their information is accurate. You are eligi- ble to get a free credit report every year from each of the three major credit bureaus. To learn more, go to www.annu- alcreditreport.com or call 877-322-8228. Reviewing your report enables you to correct any mistakes you may find. In addition, if you find a number of errors, it could be an indication that you area victim of identity theft. If this is the case, someone is using your personal information, which is something you'll want to remedy as quickly as possible. Your CPA can help What can you do to receive and maintain a healthy credit score? The best advice is to get one or two credit cards while you're relatively young, and use them wisely. That makes it possible to build a substantial credit history and demonstrate that you are a good cred- it risk. Managing credit properly is just one of the steps toward maintaining healthy finances. If you have questions about your credit score or your debt management plan -- or any other finan- cial issue facing your fam- ily -- be sure to consult your local CPA. i