Your credit score affects many aspects of your life, so its important to have a clear understanding of how it works. Learning the five main components of your score is a good first step.

•Payment history is based on your bill payment history over time. This includes but is not limited to credit card, mortgage, and utility payments. Keep your credit score in good standing by making consistent, on-time payments.

•Amount owed is determined by the amount of debt you owe versus the total amount of credit you have. The reality is, if you use more than 50 percent of your credit limit, you will likely see your score drop.

•Length of credit history demonstrates your financial stability and the ability to manage credit responsibly. Keeping credit accounts open for at least two years will positively affect your score. Length of credit history can also play a role if you are trying to reduce your number of accounts.

•New credit looks at the number of accounts youve opened recently, as well as your proportion of new accounts to older, established accounts. Also considered are the number of recent credit inquiries that have been made for your report.

•Types of credit examines your current mix of debts, which may include credit cards, mortgage and auto loans, and retail accounts. Its important to have a good blend of credit, with limited revolving credit card accounts, because it shows youre able to manage a variety of credit types, says Elling.

Visit your local Affinity Plus branch location for a free copy of your credit report. A financial professional will meet with you, one-on-one, to review your report and answer your questions. We want to help you understand your credit report and how you can improve, and maintain, your score, says Elling.

For more information about credit score factors, free workshops, or to make an appointment with an Affinity Plus Federal Credit Union financial professional, please call (888) 830-2280 or visit www.onthemoneymn.com.

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Easy Credit
Here’s a key point for those who say history is repeating itself: The American economy was fueled by easy credit in the 1920s.
Eric Rauchway, a professor of history at the University of California at Davis, says that between 1920 and 1929 the total volume of consumer debt rose from $3.3 billion to $7.6 billion, and real debt per household doubled.
“Americans were going more and more into debt to buy more big-ticket household items—cars, laundry machines and so forth,” he says. “This was a novelty, driven by new ideas of what people needed.”
This was the advent of consumerism. And widespread advertising. And celebrity culture: Some of the first American celebrities, such as Charles Lindbergh and Ernest Hemingway, came to center stage in the 1920s.
Now, according to a recent issue of U.S. News & World Report, the average American with a credit history owes more than $16,000, excluding mortgages. The personal savings rate (income minus spending and taxes) “has hovered close to zero for the past several years.” A new Standard & Poor survey finds that one in five credit card users in the U.S. is having occasional troubles paying their credit card or loan balances every month.
And the admixture of consumerism, advertising and celebrity swirl around the planet.
Global Economy
As Americans were borrowing more and more to drive the economy of the 1920s upward, people the world over began borrowing money from America.
“There was a network of debt between countries,” says Rauchway, author of The Great Depression and the New Deal: A Very Short Introduction. “But most importantly, much of this debt was owed eventually to creditors in the United States.”
As a result, a lot of countries depended on continuing lending from the U.S. to keep them afloat while they tried to rebuild their economies after the damage of the Great War of 1914-18.
Today, national economies are intertwined. Other countries are lending money to the U.S., and America’s domestic miasma is affecting the financial footing of many nations. (For instance, angry Asian investors gathered in Singapore a few days ago to ask the central bank to help them recoup lost savings that were tied to Lehman Brothers and other faltering financial institutions, according to AFP.)
The finance ministers from the Group of Seven leading industrial nations met in Washington recently to adopt a global strategy to deal with the worldwide financial meltdown.
“We are in this together and will come through this together,” President Bush said.
Speculators Flourished
The 1920s “experienced a speculative bubble, built around easy credit,” says Randall Parker, an economics professor at East Carolina University and author of Reflections on the Great Depression.
All of the financial innovations that were considered new at the time, such as installment credit and the ability to buy stocks on margin, Parker says, “brought people from the fringes into the market to keep the bubble going. People separated themselves from the fundamentals. And everybody believed that the sky was the limit.”
In the 1920s, most everyone was saying that this was a new economy and all the old rules did not apply, Parker says. “We know from economic history — they said the same things in Japan in the 1980s and during the Internet bubble of the 1990s — that when you hear those words it is time to run like hell.”
The same is true today, he adds. “People are saying that all the old rules don’t apply. That it’s a new economy. I say run like hell.”
Rest of article: http://www.iconocast.com/B000000000000065/X7/News1.htm

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