Your Report Card — Week of March 31, 2025

Would I lend to you?

Essential Economics

— Mark Frears

What you can control

As we enter another week of great uncertainty, you must still set goals. There are five parts to every goal. First, it must be specific, not just “do better.” Second, it must be measurable: not just to lose weight, but how much. Third, it must be achievable, not impossible. Fourth, it will be realistic: I will not play in the NHL. Fifth, it must be timely: you will set a target date. In addition, it will help immensely to break up your big goals into smaller ones, and you should write it down (in ink) and keep it where you can see it. The most important thing is to get started.

One of the things that could impact your ability to reach a goal is your credit report. How are you doing?

Your credit report card?

How you manage your money is captured in your credit report. There are three companies that track your credit: Equifax, Experian and TransUnion. You can obtain a free credit report once a year from these three by going to annualcreditreport.com. I would encourage you to do this, even if you think you have great credit. There can be things that show up on the report that might not be totally accurate, and it would greatly benefit you to make sure only your activity is reflected. Identity theft is a huge issue that could affect anyone.

Details

Let’s look at the nuts and bolts of your report. The five inputs are presented below, and number one on the list is your payment history. As this is 35% of the report, it is vital that you pay your bills on time, and it is the best way to work on repairing a poor credit report.

Payment History 35% (Are you paying on time?)
Debt Usage 30% (Are you maxed out on your credit card, or paying it off monthly?)
Age of your credit 15% (How long have you had a credit history?)
Types of accounts 10% (Do you have a variety of debt, such as mortgage, car or credit card?)
Application History 10% (Are you applying for a lot of credit?)

Your Credit Score is calculated from these five factors. Credit Scores, often sourced from Fair Isaac Company (FICO), generally range from 300 to 850. Anything over 700 is considered good, and over 760 is excellent. The free credit report website cited above does not give your credit score, but it can be obtained through other sources.

You may have another easier way to improve your score, as the Consumer Financial Protection Board (CFPB) has decided to remove tax-lien and civil-judgement data from credit reports. After this change was made, millions of consumers have seen an improvement in their credit score. If these types of problems were the primary issue with your report, you could have seen an increase of 40 points. If you have other issues with your credit, this will only help you a little.

Student loans

The pandemic forbearance had a material impact on consumers with student loans, especially those with a previous delinquency. They got an immediate bump in their credit score when these were temporarily erased. The time has come to pay the piper, as these payment histories will be restored in the first half of 2025. This will impact more than nine million student loan borrowers, per the New York Fed Consumer Credit Panel.

Borrowers were given an “on-ramp” period to get back on track, and that ended in September 2024. As you can see below, after the on-ramp, there will be a higher percentage of past due loans than before the pandemic.

Source: NY Fed Consumer Credit Panel/Equifax; Federal Student Aid

For consumers with credit scores over 760, a new delinquency could lower their score by 171 points, per the NY Fed.

Impact on other areas

Your credit report will not just affect you when applying for a car loan or mortgage. It will have an impact on the rate you pay on a loan, your cost of insurance (they now look over this report), and even employment. Employers have learned that how you manage your money is a good indicator of how you manage life.

Economic releases

Last week continued the story of ups and downs. Confidence lower, but Durables higher. GDP a bit higher and Personal Spending slower than expected.

This week’s calendar is focused on employment with JOLTS, ADP, Initial Jobless Claims and nonfarm payroll. See below for more detail.

	Upcoming Economic Releases:	Period	Expected	Previous
31-Mar	MNI Chicago PMI	Mar	45.0	45.5
31-Mar	Dallas Fed Manuf Activity	Mar	(5.0)	(8.3)

1-Apr	Construction Spending MoM	Feb	0.3%	-0.2%
1-Apr	JOLTS Job Openings	Feb	7,680,000	7,740,000
1-Apr	ISM Manufacturing Index	Mar	49.5	50.3
1-Apr	ISM Manufacturing Prices Paid	Mar	64.8	62.4
1-Apr	ISM Manufacturing Employment	Mar	N/A	47.6
1-Apr	ISM Manufacturing New Orders	Mar	N/A	48.6
1-Apr	Dallas Fed Services Activity	Mar	N/A	4.6
1-Apr	Ward's Total Vehicle Sales	Mar	16,050,000	16,000,000

2-Apr	ADP Employment Change	Mar	120,000	77,000
2-Apr	Factory Orders	Feb	0.5%	1.7%
2-Apr	Factory Orders ex Transportation	Feb	0.4%	0.2%

3-Apr	Challenger Job cuts YoY	Mar	N/A	103.2%
3-Apr	Initial Jobless Claims	29-Mar	225,000	224,000
3-Apr	Continuing Claims	22-Mar	1,870,000	1,856,000
3-Apr	ISM Services Index	Mar	53.0	53.5
3-Apr	ISM Services Prices Paid	Mar	N/A	62.6
3-Apr	ISM Services Employment	Mar	N/A	53.9
3-Apr	ISM Services New Orders	Mar	N/A	52.2

4-Apr	Change in Nonfarm Payrolls	Mar	135,000	151,000
4-Apr	Change in Private Payrolls	Mar	130,000	140,000
4-Apr	Unemployment Rate	Mar	4.1%	4.1%
4-Apr	Avg Hourly Earnings MoM	Mar	0.3%	0.3%
4-Apr	Avg Hourly Earnings YoY	Mar	3.9%	4.0%
4-Apr	Labor Force Participation Rate	Mar	62.4%	62.4%
4-Apr	Underemployment Rate	Mar	N/A	8.0%

Mark Frears is a Senior Investment Advisor, Managing Director, at Texas Capital Bank Private Wealth Advisors. He holds a Bachelor of Science from The University of Washington, and an MBA from University of Texas – Dallas.

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