Articles of Interest on Financial Topics
As a credit union committed to our members and the communities we serve, we are excited to share our financial knowledge with you. Check back frequently, as we will update throughout the year!
- How to Improve Your Credit Score
- How to Give Your Finances a Spring Cleaning
- How to Tell You're Ready to Buy a House
- Defending Yourself Against Identity Theft
Almost no one is perfect when it comes to credit scores. The average score for Americans has been inching up over the past decade and is now close to 700. Many lenders consider that a good number, but the highest possible score is 850, according to Fair Isaac Corp (FICO), which developed some of the most widely used models for credit scoring. The lowest possible score is 300.
So how can you nudge your score higher? Here are some simple steps you can take to improve your credit score over the next year:
Make your credit card payments on time every month. Pay every bill by the due date,
even if you can only cover the minimum due. The biggest factor affecting your credit score is your payment history on installment loans, credit cards and other debt. It accounts for 35% of your score. So if you have a good track record with paying your bills on time, it can go a long way toward improving your credit score. If you have trouble remembering payments, look into online automatic bill pay from your checking account. Your check won’t get lost in the mail either.
Pay off your debts as soon as possible. Ideally, you’ll want to get rid of bills that charge
the highest interest rates first. But as long as you’re eliminating debt, you’re taking steps to
increase your credit score. You can use loan calculators to figure out how long it will take to
pay off your debts.
Check your credit reports. Visit Annualcreditreport.com to get a free copy of your credit report from each of the three major bureaus — Equifax, Experian and TransUnion — once every 12 months. You’ll want to make sure there aren’t any errors or other problems in your records. If you find a mistake, alert the reporting bureau about it and ask for a correction. It would also be a good idea to send the same message to the lender that provided the information. Fixing errors can take months, but keep in mind that if you don’t ask for corrections, no one else will. So do your part to make sure your records are 100% accurate.
Don’t rush to close a credit card after paying it off. Your credit score may improve if you reduce the amount of credit you’re using compared with the amount you have available — a measure known as credit utilization ratio. An unused but open account can help your utilization ratio. A closed account can’t.
When it comes to credit scores, chances are there’s room for improvement. By consistently paying your bills, getting rid of existing debt and checking your credit reports for accuracy, you can gradually improve your score and increase your chances of getting approved the next time you need to apply for a loan.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved.
As technology advances, you can be sure that identity thieves are not far behind. Here are some common methods cyberthieves use to steal your personal information and how you can increase your security while shopping or banking.
Your email messages may not be quite what they appear to be if you’re targeted by a phishing scam. Phishing is the act of sending fraudulent emails that seem to come from familiar businesses. These messages contain links to phony websites designed to steal personal information either directly or through malware and keyloggers. Often you’ll see a problem referenced with a request to click on the link provided to correct it. Once you’ve entered your information, ID thieves can access your accounts.
Vishing is the telephone version of phishing. Callers are sometimes bold enough to suggest the victim call back to verify authenticity. But the vishers don’t actually hang up; instead they play a recorded dial tone to make the victim believe he’s making a call.
Debit and credit card fraud
Most shoppers love the convenience of plastic, and identity thieves use this to their advantage whether it involves skimming, phishing, vishing, malware, mail theft or just looking over a victim’s shoulder to steal account numbers. When debit cards are compromised, it’s particularly alarming because fraudulent purchases drain your checking account instantly.
Business email compromise, or BEC, scams have cost companies more than $1.2 billion. A phony email from a CEO requesting that funds be transferred per attached instructions is sent to an employee. Because the email appears to come from the employee’s superiors, and because the message so closely resembles requests this employee receives regularly, the transfer is often made without question. The money then ends up in overseas accounts that are almost impossible to trace.
Tips to protect yourself
To even further reduce fraud risk:
- Install the latest editions of antispyware, antivirus, firewalls and browsers to all devices, and password-protect them.
- Use strong passwords for all accounts and change them frequently.
- Monitor accounts and credit reports to detect fraud early
- Don’t use public Wi-Fi networks for financial transactions.
- Keep cards away from public view, and shred personal documents before discarding.
- Opt in for two-factor authentication on accounts.
- Turn off bluetooth and near field communication when not in use.
- Don’t click on email links. Type full web addresses to access business websites.
- Never share sensitive information with unsolicited callers or email senders.
- To verify calls, hang up for at least one minute to insure the first call is disconnected.
- To protect your business from BEC scams, use a two-step verification process for all money transfers. Verbal confirmation is also wise.
Staying informed and adopting smart fraud prevention practices will go a long way toward protecting your identity. Between your efforts and your bank’s security, you should be able to stay a step ahead of identity thieves.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved
Making the decision to become a homeowner is emotionally and financially complex. Here are some key things to ask yourself if you’re considering whether buying is right for you.
Do you have a good reason to buy?
Sometimes switching from renting to buying is a no-brainer. Maybe you live in a modern one-bedroom apartment in a chic part of town, but you have a baby on the way. If you want a place in a good school district, with more square footage and a yard, buying may well be your best bet.
Other times, the urge to buy is driven by emotion: You see a house you like and you “just know.” There’s nothing wrong with that reaction, but take time to check out the property before you make any commitments. If it’s too far from work, near a noisy road or the best house on a bad block, it may not be as good a deal as it first appears.
And remember: Houses go on the market all the time, and there are tens of millions of single-family homes and condos in the U.S. So there’s no need to worry if your first choice doesn’t work out; your home is out there.
Can you make the upfront investment?
Buying a home requires an initial investment that you can’t ignore.
First, many lenders require a down payment of 20% of the home price. That’s $40,000 for a home that costs $200,000, about the median price in America. You’ll also owe closing costs, which could include loan-origination fees, discount points, appraisal fees, survey fees, underwriting fees, title search fees, and title insurance. Those could total another few thousand dollars.
The expenses don’t end there. You’ll want to hire an independent inspector to look for defects in a home before you buy. This will cost several hundred dollars, but could save you thousands in repairs. And then there are moving costs, state or city taxes, utilities installation and the costs of changes you might want to make to the home — such as new flooring or painting — that are easiest to do while it’s empty.
This isn’t meant to scare you off; buying a home is still a smart choice for many people, despite the costs. But it does take a lot of cash.
Can you afford the upkeep?
Your mortgage payment might be fixed for the next 30 years, but your property taxes and insurance rates can rise. And if you didn’t make a 20% down payment, you’ll have to buy private mortgage insurance, or PMI, until you have 20% equity in your home. It costs about $165 per month on a $200,000 loan.
Once you’re a homeowner, you’ll also have to pay certain utility bills that might have been included in your rent. And you’ll be responsible for maintenance: double-pane windows one year, a new garage door the next, fixes to the roof five years up the road. It adds up.
These numbers are based on averages. Plug your specific figures into a rent-or-buy calculator to find out if you’re ready for homeownership. And know that there is no one answer that’s right for everybody. Whether you keep renting or buy, your decision should be right for you alone.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved
Ah, spring! It's the season of renewal, when we can count on longer and brighter days, the return of baseball and the urge to get the house in order.
That goes for many people's financial houses as well. Spring is a good time to comb through your personal finances and ensure that you're managing your budget, credit cards, investments and insurance in the best possible way. Here's how to get started.
Reassess your household budget
Take stock of your budget, including any major changes in income or spending. Did you or a family member receive a raise, get laid off, take some unpaid leave or adopt a pet? These and other changes should determine how you allocate your money.
Similarly, if you know a major expense is coming down the pipeline — such as a child starting college, an operation or a vacation — you can cut spending now in order to boost your financial cushion.
Get a grip on your credit
Financially speaking, there is perhaps nothing more important than your credit score. It's a measure of how trustworthy you are as a borrower, and it affects your ability to get approved for and receive low interest rates on credit cards and loans. Resolve to improve your credit habits and bolster your score: Pay your bills on time, don't take on too much new debt, and create a plan for settling any outstanding balances.
Even if you have good credit, you should re-evaluate your credit situation. Review your interest payments and consider transferring your balance to a card with a lower rate. If you took out a mortgage or auto loan a while back, ask your lender if you could save by refinancing.
Everyone can monitor his or her credit easily — and for free. You're entitled to a free copy of your credit report from each of the three major reporting bureaus (Equifax, Experian and TransUnion) once a year. These reports reflect your borrowing and payment history and help determine your credit score. Occasionally, they contain mistakes that could lower your score, so keep an eye out for errors, and ask the bureau to correct any you find.
Rebalance your investment portfolio
When you set up your retirement accounts, such as a 401(k) or 403(b), you likely selected investments based how much growth you wanted to achieve — and how much risk you were willing to accept.
But as you near retirement, you may want to take on less risk — or you may find that your proportion of stocks and bonds has drifted from your target. That's why it's a good idea to revisit, and perhaps rebalance, your portfolio each year. This could entail moving gains from your “winning” holdings and reinvesting the profits elsewhere.
Check your insurance policies
Home, life, auto — make sure you have the coverage you need and that your beneficiaries are correct.
It's also worth asking your carrier if you're eligible for any discounts. For example, if you've been accident- and ticket-free for several years, you might qualify for a good driver discount. And if you've been with the same company for a while, you may want to shop around for quotes for comparable coverage.
Organize your important records
Spring cleaning usually means throwing things away, but you should retain copies of important financial statements. Don't want to keep the paper version? It doesn't take long to download and copy records to your computer, or store them in a secure cloud service.
Just as preparing the soil in spring helps produce a healthy crop, tending your financial fields can set you up for financial success. There's no better time to begin.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved