At a glance
Factors that influence credit scores
- payment history
- amount of outstanding debt
- length of credit history
- types of credit used
- new credit applications
- unpaid parking tickets
- money-related judgments in court
- property and tax liens
Source: Elizabeth "E.A." Black, Vision Trek Consulting, www.visiontrekcon...>
Steamboat Springs To start her workshop Tuesday, Elizabeth "E.A." Black cited dismal figures about financial literacy in the United States.
According to the National Federation for Credit Counseling, 41 percent of U.S. adults give themselves a grade of "C," "D" or "F" on their knowledge of personal finance. Forty-two percent of adults keep close track of their spending, according to the figures. Thirty-two percent of adults reported having no savings.
Black used her financial literacy workshop to address those concerns. She offered one for youths and eight attended. One person attended the general workshop that followed. Black provided information about establishing a spending plan, credit reports and new credit rules on the way.
Having savings is crucial to financial stability, Black said. The rule of thumb is that people should try to save six months' worth of expenses. If that's unreachable, Black suggested saving $1,000 to start.
Savings can rescue people who lose jobs, she said.
"If people had savings, it would have at least bought them some time to put together a contingency plan," Black said.
She handed out a worksheet to help people create monthly spending plans based on income and expenses. Once people figure out their needs and wants, they can start saving. Black recommended putting money first toward credit cards with the highest interest rates. Paying off cards with small balances also is smart, she said.
People often are surprised after they review spending.
"Wait staff who don't go home after work, who buy each other drinks after work, that's where your money is going," Black said.
Black has a background in banking, served as director of the Yampa Valley Housing Authority and is a certified homebuyer education instructor. She is now the president/owner of Vision Trek Consulting. Black hopes to offer additional financial literacy workshops, possibly in August.
She encouraged people to get their free yearly credit report from Experian. When lenders look at credit reports, they want to see a pattern of saving. The No. 1 concern is paying bills on time, even if you don't pay them in full, Black said. Being 30 days late on a payment could knock 100 points off a credit score, she said.
New credit card rules are scheduled to go into effect in February, and those will change what companies are allowed to do, she said. They will restrict fees charged to consumers, limit interest rate changes and require more disclosure about credit cards, Black said.
For example, credit card companies won't be able to raise interest rates until a customer is 60 days late on a payment. They'll also prohibit people younger than 21 from getting a credit card without parent approval or proof that they can pay for it.
The new rules probably will result in reduced reward programs, lower credit limits and other changes, Black said.
Financial literacy is "like learning a sport," Black said. "It takes practice."
Erin Bentley attended Tuesday's session and said it helped her understand more about finance and the upcoming changes to credit rules.
"Forty-one percent of adults would give themselves a 'C,' 'D' or 'F,'" Bentley said. "I would probably be an 'F-plus' or a 'D-minus.' Now I just have to kick myself in the rear and do my homework."