Millennials: Timely Credit Card Payments Are Crucial

Between juggling student loan payments, rent, and other bills, you might be tempted to skip a credit card payment. Don’t do it. Missing a payment can lower your credit score, which can lead to difficulty getting a loan or even a job.

Millennials, young adults ages 19 to 29, actually have the fewest number of credit cards and the lowest average balance on them, according to Experian’s annual state of credit report. But, they also have the lowest credit scores and frequently make late payments on their cards.

The average overall credit score in Experian’s report is 681; the average for millennials is 628. Shorter credit histories and high utilization rates are two factors that account for the low scores.

To learn more about your credit score and give it a boost, understand:

* What makes up a credit score—Payment history, amounts owed (especially as a percentage of credit available–the utilization factor), length of credit history, new credit, and types of credit in use determine your credit score.

* How to get your credit report—You can request one free credit report a year from each of the three major credit reporting bureaus by visiting annualcreditreport.com, the only website authorized to provide these free reports. You also can call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281.

* How to improve your credit score—Pay all bills on time, every time. Also consider using a secured credit card. A secured card trades access to credit for your commitment to keep a certain amount of money in a savings account. The professionals at Hopewell Federal Credit Union can set you up with a secured card. Stop by or call today at 740.522.8311.

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Five Steps to Organizing Your Finances

Do you know your net worth? Or how much you spend each month, and on what? Or how much you can expect from your pension plan or Social Security in retirement?

A no to most of these questions puts you with the majority of the population who have been too busy with life to get a handle on their finances.

Fortunately, there’s a five-step action plan to help you take control of your money.

1. Set up a financial filing system. Create a personalized filing system by labeling accordion file pockets with broad financial categories. Then label regular file folders with subcategories that fit your situation and file them into the accordion pockets. For example, create a Property & Casualty Insurance accordion file and fill it with a Vehicle Insurance regular file folder.

2. Gather records. Look through your records to identify missing information. For example, you need an estimate of your Social Security retirement benefits. To request one, contact the Social Security Administration at 800-772-1213. Gather copies of your health, disability, life, homeowners, and vehicle insurance policies, and get a copy of your credit report. Contact the three national credit bureaus for information about how to request a copy of your credit report and how to correct any errors you find (Experian 888-397-3742, Equifax 800-685-1111, Trans Union 877-322-8228).

3. Size up your situation. Add the estimated current value of all assets, including your home, car, personal property, savings, investments, and retirement accounts.

Next, add all liabilities, including mortgage, credit card balances, and any other outstanding debt. Then subtract liabilities from assets to figure net worth.

Then, make a list of income and expenses by reviewing paycheck stubs, checkbook register, and credit card statements from the past year. Finally, track spending for a month by saving all receipts or recording cash purchases in a notebook. A spending plan form or money management software program helps organize spending by category.

4. Chart a course. Set financial goals–long-term and short-term–and figure how much money you’ll need for each. Create a target saving and spending plan that meets needs using your list of income expenses. For a month or more, track actual spending to see how you’re doing, making changes as necessary

5. Brush up on money management basics. Contact or visit Hopewell Federal Credit Union for more information about how to save and spend finances wisely.

Keep Credit Intact: Dispute Report Errors

An error on your credit report can cost you more than just the time it’ll take to correct it. That error also could result in a lower credit score, which could mean you’ll pay higher interest rates on loans or be denied outright. Getting slapped with an undeserved high-interest rate happens to about 5% of consumers who have credit report errors, according to newyorktimes.com.

Credit reports and credit scores, while different, work in sync. A credit report shows your credit activity over time. It shows if you owe money and to whom. It also shows whether you make payments on time or if you’re late; it shows if you’ve stopped making payments altogether. Based on information in your credit report, a credit score is a three-digit number lenders use to assess whether or not to offer you credit and at what price. Negative credit information, accurate or inaccurate, can result in a lower score.

If you have a low credit score, you’ll pay more to acquire a loan, but that’s not the only way a low score affects your finances. A low score also can result in not being able to rent an apartment, get affordable insurance coverage, or get a job.

The first steps in making sure your score is the score you deserve are to review your credit report for accuracy and to report any discrepancies, according to the National Foundation for Credit Counseling (NFCC), Silver Spring, Md. Follow this advice to make sure your report is clean:

* Check your credit report. You can request one free report a year from each of the three major credit reporting bureaus by visiting annualcreditreport.com. This is the only website officially authorized to provide credit reports. You also can call 877-322-8228 or complete a request form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Stagger the reports every four months in rotation so you can keep tabs throughout the year. Review your report at least three months before you make a potentially affected financial move so you have time to dispute any errors and have them corrected.

* Review your report for accuracy. Look for errors, large and small, as well as omissions such as an account that you paid but didn’t get credit for. Verify the basics such as name, Social Security number, and address.

* Know your rights. The Fair Credit Reporting Act (FCRA) gives you free access to your credit report within 60 days if you’ve been denied a loan, insurance, or a job based on information in your report. It’s up to you to initiate the dispute process.

* If you find an error, file a dispute with the credit reporting agency. File the dispute in writing so you will have a paper trail. In your dispute, include your full name and address, what you want investigated, the disputed items, and an explanation of why you think the information is inaccurate. FCRA generally requires credit reporting companies to investigate items in question within 30 days to 45 days of when the dispute was filed.

* Understand that accurate negative information won’t be removed. Negative information that is true will stay on your report. Credit reporting agencies can report most negative information for seven years; bankruptcies can remain on your report for 10 years.

* Stay clear of credit repair companies. There is no such thing as a quick fix and there’s nothing that a credit repair business can do for you that you can’t do for yourself–for free. Most credit repair companies charge high fees and rarely deliver results.

For help reviewing your credit report ask the staff at Hopewell Federal Credit Union or call an NFCC member agency certified counselor. Call 800-388-2227 to be connected to an agency in your area, or visit DebtAdvice.org.

The first time you shop for an auto

The first time you shop for an auto loan can be time-consuming and a little confusing. But, once you know these car-buying basics, you’ll save money on financing your first car or your 10th:

1. Evaluate your financial situation. If your credit history is spotty, clean it up for at least six months before applying for a loan.

2. Compare annual percentage rates (APRs). Some lenders will give you a rate break if you automate payments from your checking account.

3. Consider buying used. The average cost of a used car is less than half of a new one.

4. Get insurance quotes. Most lenders require collision and comprehensive insurance on new and used vehicles.

5. Realize the less you borrow, the more you save in loan interest.

6. Pay off the loan as quickly as possible and you could save hundreds of dollars in interest charges.

7. Ask a Hopewell Federal Credit Union loan officer to preapprove your loan so you can bargain for a dealer discount based on a cash sale.

8. Understand the loan contract. A loan officer can help you evaluate a loan agreement.

9. Make purchasing the vehicle, financing the vehicle, and trading the vehicle three separate transactions.

Call Hopewell Federal Credit Union today at 740.522.8311 for all of your vehicle loan needs.

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Give Your Debts a Financial Health Check

A debt-to-income ratio is a measure of financial stability calculated by dividing monthly minimum debt payments by monthly gross income. This calculation gives a straightforward depiction of your financial position. Typically, the lower your ratio, the better handle you have on debt.

Determining your debt

* Collect your most recent credit billing statements for current balances
* Outline your total monthly bills using two columns: bill type (such as car loan, mortgage/rent payments, and so on) and monthly payment. Do not include bills such as taxes and utilities in this list.

* Add up the total for all of the monthly payments listed.

* Calculate your monthly before-tax income. If you receive a paycheck every other week, as opposed to twice a month, your monthly gross income is your before-tax income from one paycheck times 2.17.

* Your monthly debt-to-income ratio is calculated by dividing your monthly debt payments by your monthly income. For example, someone with a monthly income of $2,000 who is making monthly payments of $500 on loans and credit cards has a debt-to-income ratio of 25% ($500 / $2,000 = .25 or 25%).

Staying aware of your ratio can help avoid debt reaching a problematic stage.
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Does Spring include Graduation? Be Prepared!

Each spring thousands of college graduates leave the safe haven of university life for the real world. From paying off student loans to the shock of auto insurance rates, there’s a host of new financial experiences awaiting these grads, and some situations for which they’re totally unprepared.

A 2012 study published in the International Journal of Business and Social Science found that 70% of undergraduates own credit cards. The report also states that very few students use their card for tuition but that most of the students would use credit cards for school supplies, textbooks, and food. Almost half the respondents say they only use their credit cards during emergencies.

The cost of credit
Perhaps the most unsettling surprise for recent college graduates surrounds the long-term impact that poor credit decisions can have during and after college.

To help avoid getting into credit trouble, college students and recent college grads should get copies of their credit reports to have a clear picture of their financial situations. Credit reports also can show the deep impact debt can have on credit histories, and allows you to spot any inaccurate information. Individuals can obtain a free copy of their credit report from each of the three major credit reporting bureaus–Equifax, Experian, and TransUnion–once a year.

In addition to obtaining a credit report, young grads also will want to regularly check their credit score. A credit score is a number from 300 to 850 and is used by potential lenders to determine the interest rate on loans and whether credit is granted, and at what cost. A credit score also can be obtained from each of the three credit reporting bureaus–but at a cost of around $15.

It’s never too early to start saving for retirement
One of the most serious mistakes young grads can make is to put off saving for retirement. Those in their late teens and early 20s may think that planning for retirement makes little sense, considering that it’s an event that won’t take place for another 40 years. But retirement is a process as well as an event. What occurs in the many years that lead up to retirement has a profound effect on the quality of retirement once it arrives.

Save for a rainy day
Many financial experts recommend you have three to six months of your salary and income put away in case of an emergency or unexpected expense. It’s important that this money be liquid, which means that you can withdraw it without penalty at a moment’s notice. You also will want to earn as much interest on it without incurring risk, which may make a money market account your best option. While you’ll never lose the money deposited into this account, you’re not guaranteed to increase the value either.

Call Hopewell Federal Credit Union today. We’re ready to provide the services and support you need–as you get started and as you move through life

Errors in Your Credit Report: Now What?

Credit reports contain your personal financial information. Incorrect information can affect your ability to get a loan, rent housing, or get a job because businesses often make their decisions based on that data.

Keep your reports accurate:

* You are allowed one free report every 12 months from each credit bureau: Experian, Equifax, and TransUnion. Visit annualcreditreport.com or call 1-877-322-8228.

* Check the basics first. Check variations in name, Social Security number, and address. Experian lists all variations reported to it to ensure the consumer has a full account of the identifying information reported and can act on it. Often, variations are simply the use of a nickname or a transposed address digit.

* Verify data. Some can get complicated. If a loan is sold, the lender listed may not be the original.

* Look for errors. Problems can be large or small. A study by the Policy and Economic Research Council, Durham, N.C., of more than 2,000 consumers found that only 0.93% of credit reports examined by consumers prompted a dispute that resulted in a credit score change of 25 points or more. It also found that only 0.50% of consumers had credit scores that moved to a higher “credit risk tier” upon dispute resolution.

When counselors at credit counseling agencies review reports with clients, they often find that the unfavorable information is valid. But when it is in error, it’s important to start the correction process right away.

* Dispute errors. Contact the company that has provided the incorrect information and the credit reporting agency in writing and keep copies. Work with both the source of the information and the credit reporting company to resolve the issue quickly.

For help understanding your credit score, talk to the professionals at Hopewell Federal Credit Union. They will be happy to explain the details.

Copyright 2011 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.