Four Simple Steps to Getting Your Credit Score Back on Track

Written by Amanda Harr

One of the biggest life lessons that will prove valuable over and over again: the credit-related mistakes made in your past can come back to haunt you in the future, particularly if you intend on purchasing a home, vehicle, or taking out any other type of credit.

Your payment history, types of credit used, new credit, length of credit history, and amounts owed play a huge role in the importance of a FICO® score, which in turn determines if you’re eligible to make significant purchases, such as a home or car.

The silver lining to this story is, even though you may have a terrible credit score, it is not finite. Your credit score changes monthly, and there are several things you can do to help steer yourself in the right direction. In this blog post, we’ll outline a simple, four-step process to help you begin improving your credit score and work toward achieving your financial goals.

If you need help or advice regarding your current credit score, here are some helpful sites:

Step #1: Find out what your credit score is.

Did you know that one in eight Americans is unaware of their credit score? In fact, even among those who have checked their credit score, 46% haven’t done so in over two months.

If you would like to maintain or improve your credit score, the first step is finding out what it is! You’ll want to get copies of your credit report from all three major bureaus. You can obtain a report once per year from each bureau for free (Equifax, Experian, TransUnion).

While your credit score alone does not determine whether a lender can issue you credit, it is very important. Credit scores range from 300—850. A credit score of 711 is considered “good” by most lending standards.

The components of FICO scores are made up of five categories: length of credit history, credit mix, new credit, payment history, and how much you owe. Once you determine where you stand, work to improve or maintain your credit score.

Related Reading: How Does Your Credit Score Stack Up?

Step #2: Pay down your outstanding debt.

Start by putting a stop to your credit card usage. Next, use your credit report as a reference to list all of your open credit. Use your credit card statements to determine how much interest you’re paying on each card, and prioritize which ones you’d like to pay down first. Try to pay off credit lines with the highest interest first, while maintaining minimum payments on the rest of your credit cards.

Some people may feel like paying down their debt is an unattainable goal, but with the right plan and perseverance, you CAN BE debt-free. There are numerous financial advisors, such as Dave Ramsey and Suze Orman, who have strategies on how to get out of debt; find an advisor and strategy that works best for you.

Step #3. Make on-time payments a habit.

Once you have a plan, be sure to adhere to it! Your payment history contributes to 35% of your overall credit report calculation, and late or missing payments are not easily corrected. If you have a pattern of making late payments and then make a series of on-time payments, your FICO score should improve.

Make it easy by setting up automatic payments for all of your recurring bills. By doing this, you’ll ensure you don’t miss paying any amounts due, which will help you since missing payments can trigger hits to your credit score and punitive charges like late fees. Paying your bills on time, every time will help build your credit score and keep more money in your pocket.

Step #4: Regularly monitor your credit score and usage.

I can’t stress enough how important it is to monitor your credit score and attend to the details of your financial plan to improve your credit score regularly. Having good credit can mean the difference between paying a 3.5% rate versus a 5.5% (or higher) interest rate on purchases such as your car or mortgage. That may not sound like much, but lowering a mortgage interest rate by as little as 0.5% could save as much as $150 a month on a $300,000 home loan.

Sites like CreditKarmaWalletHub, and Identity Guard offer free credit monitoring yearly and/or on a trial basis. It won’t always be easy, but nothing will compare to the satisfaction you will feel when you’ve improved your financial wellbeing.

Identifying and cleaning out any unnecessary expenses will help you keep your credit score on track going forward. Apps such as Mint, SWBC’s Vault platform, and most online banking services are also great tools to help you track your spending, manage your finances, and grow your wealth.

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4 Ways to Teach Your Kids About Money

By JOHN PETTITCUINSIGHT.COM

Worrying about money can keep us up at night. A lot of those worries wouldn’t exist if we’d just done a few things differently when we were younger. Now you know how important it is to teach your kids when they’re young, so here are a few ways you can start teaching them about money now…

Make them earn some: It’s hard to learn about handling money when you don’t have any. That being said, don’t just give them money and let that be the end of it. Give them responsibilities and provide them with a regular allowance so they’ll learn that money doesn’t grow on trees. Paper grows on trees and money is made of paper, but let’s just ignore that for now.

Teach them to save: If you let your kids spend their allowance freely, you won’t be doing them any favors. Talk to your children about work and retirement and teach them about compound interest. Establish savings goals for your kids and reward them for saving each month by throwing in a little extra when their goals are met.

Let them spend it: You can’t afford to buy your children everything they want. Teach your kids about making responsible purchases and let them spend money on things that make sense. Not only will they get something they want, but they’ll learn a little bit about spending, saving, and budgeting.

Teach them to be cheap: Ok maybe frugal is the better word. But the point it, show them how to save their money for the things that really matter. Don’t buy them a drink in the checkout line of the grocery store when you’re about to head home to where the drinks are. Show them that most of the time there’s usually a better option.

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How to Protect Your Credit Health When Money is Tight

With nearly two-thirds of Americans feeling financial strain due to the COVID-19 pandemic, it’s an important time to take an active role in our finances. Making financial plans can feel demotivating if money is tight, but understanding your goals is the key to making productive financial decisions. There are typically two key areas of focus when creating a financial plan: growth and protection. Growth isn’t possible for many people right now given the rise in unemployment and reductions in work hours. However, even if your income is unstable, there are still steps you can take to protect your credit health.

Know where you stand

According to week eight of TransUnion’s Consumer Financial Hardship Study, 36% of Americans think it’s very important to monitor their credit score during the current health crisis. They’re absolutely right. Checking your credit scores and reports helps you baseline your credit health and enables you to keep track of any changes to your credit history, which may in turn affect your score.

Accessing and monitoring your credit information is an important part of managing your credit health during COVID-19, so the credit reporting agencies (TransUnion, Equifax and Experian) are offering all Americans free weekly credit reports online at annualcreditreport.com through April 20, 2022.

Now that you have weekly access to your reports, try to schedule a consistent time to check them. Lenders typically report updates to accounts each month, but different lenders may update at different times. It’s important that you make a habit of monitoring your credit regularly.

When reviewing your credit reports, look for any updates you’re anticipating or unexpected changes that may need closer review. Your credit report is a representation of your data identity, and you should manage it as a valuable asset. Just like you, the credit reporting agencies want to be sure all your information is accurate and up to date. This ensures the credit reporting system is fair for everyone. Check your personal information, and go through the open credit accounts listed to make sure you recognize all of them. Review account balances and payment histories to be sure they’re accurate. You may also want to note the contact information for each of your lenders. If you have a question about a specific item on your report, it may be a good idea to contact your lender directly to get more information. You can also submit a dispute with the credit reporting agency that issued the credit report to request an investigation of anything you believe is inaccurate.

Continue making payments

Your payment history is such an important factor in calculating your credit score, so making on time payments consistently, if you’re able, is a good way to protect your credit health. If you think you may struggle to pay, talk to the company you have the account with as soon as you can, before you miss the payment. We’ve seen a positive trend in companies reaching out to their customers to provide guidance during COVID-19. In fact, TransUnion’s Consumer Financial Hardship study shows that 69% of financially impacted Americans say that companies they have accounts with have contacted them about payment accommodations. But you don’t need to wait for your lender to contact you — almost half of all financially impacted Americans have already reached out to their lenders to discuss payment options. Be proactive if you’re having financial difficulties. COVID-19 is affecting people in many different ways, but everyone knows people are struggling. There are options and resources available to help provide support.

If you do plan to enroll in forbearance or deferment programs with your lenders, ask questions to be sure you understand all the terms. Good questions to ask might include whether the lender will still assess fees, how interest is calculated, and how the lender will report your account to the credit reporting agencies while it is in the hardship program. Then, try to develop a plan for when the accommodations end. There are guidelines for federally backed loans like mortgages and student loans thanks to the CARES Act, but relief options provided by private lenders may vary. Be sure to get all agreements in writing so you have the information you need to build a plan for restarting postponed payments later.

Guard against fraud

With new and sometimes confusing information out there about stimulus checks and small business loans, the environment is ripe with opportunity for fraudsters. The TransUnion Consumer Financial Hardship study found that a quarter of Americans know they’ve been targets of digital fraud schemes related to COVID-19. If someone gets access to important information like your Social Security number, they can wreak havoc on your finances and credit health. Be especially cautious right now with communications related to the CARES Act and stimulus checks. Remember, no government organization will ask you to share sensitive information over phone, email or text message. Only use official government websites when submitting information online.

If you don’t plan to apply for new credit anytime soon, you may want to consider freezing your credit. This helps prevent fraudsters from opening new accounts in your name, as a freeze prevents lenders from accessing your credit report after they receive a new credit application. Credit freezes are free, don’t affect your credit score and can be easily lifted whenever you need to do so. You will need to place a credit freeze with each of the three credit reporting agencies separately if you want the most protection.

You also can add a free fraud alert to your credit report if you think you may have been a victim of fraud. A fraud alert does not block potential lenders entirely, but notifies them to take extra steps to verify your identity before extending new credit. If you add a fraud alert to your report at one credit reporting agency, the other two are notified automatically to add one to your report as well.

It’s completely natural to feel frustrated about a lack of progress with your finances, especially if you’ve made sacrifices to build your wealth and credit history. And it’s understandable that many people may feel like all they can do is sit back and wait for the economy to improve. But you don’t have to. You can take proactive action to protect what you’ve built. Establishing consistent, protective habits now can pay off later when we’re all better able to concentrate on growth.

For more information, click here.

Remember: You Can Bank with Us Anytime, Anywhere by Using our Mobile App

Bank with Us Anytime, Anywhere

You’re constantly on the go and checking your balance and paying bills from home might not always be convenient. Omaha Federal’s mobile banking app allows you to do this and more — when and where it’s convenient for you.

Download our “Omaha Federal Credit Union” app from your App store today to:

  • Check your balance — Within seconds, check the balance of all your Omaha Federal accounts.
  • Pay bills — Make payments to anyone or any company by scheduling one-time or recurring payments.
  • Transfer money — Make transfers between your Omaha Federal accounts and send funds electronically to accounts outside of the credit union. Make payments to different merchants electronically.
  • Get alerts — Sign up to receive mobile texts alerting you to low account balances and loan payment due dates for all your Omaha Federal accounts.
  • Check statements — View monthly statements for your Omaha Federal credit card.

For more information, download our mobile banking app visit one of our branches, or call us at 402.399.9001.

College Students Share Their Honest Thoughts on Student Finance

It has been a year of twists and turns for everyone…but particularly for college students. Zogo brought together a group of them to get their honest thoughts on the current state of education and student finance, discussing everything from online learning to the student debt crisis. These were some of the key questions and answers from the discussion:

Did your parents prepare you for taking charge of your finances when starting college? Or was this something that you learned from just throwing yourself into it?

Natalie: I mostly learned from throwing myself into it. My parents focused on teaching me to save my money, but I guess I was never really taught the ‘why’ part. I definitely wasn’t prepared for all the extra expenses at college that you wouldn’t think of, like sports fees and textbooks.

John: A little bit of both. A lot of it comes with experience, but saving money was the first and foremost thing I was taught by my parents. I actually learned a lot from my two older sisters who had been through the college process and watching them make their first financial decisions.

Should parents or schools be the one to teach kids about student finance?

Kevin: Schools would probably be one of the best platforms for that. Parents may come from different backgrounds and maybe they don’t know enough about the topic. There could be a chain of knowledge that’s missing. Schools would be a good place to instill some of that base knowledge and cover everybody on a uniform basis – the question is how would they do that.

Roshni: Schools should do at least the foundation of personal finance. Every family has a different financial position or viewpoint – they may not have the privilege to teach their kids about it. Schools need to prepare students and not just release them into the real world.

Do you think that high schools do a sufficient job at preparing students for taking on student debt?

John: Everyone knew it was coming. We all knew it was something we would have to deal with, but school never really highlighted the complexities of it like they should have. They spent so much time focused on getting us into college, that they overlooked student debt. Even the tuition differences between in-state and out-of-state colleges weren’t really highlighted. They were just keen on getting us into the best school possible.

Roshni: There were close to 4,000 students in my high school. My grade alone had 800 kids. Among all of those students, there are only two college counselors. The information tends to be geared toward certain groups depending on who needs it most – when really it should be universal.

There may be no answer to this, but do you think there is a way to fix the student debt crisis?

Natalie: There are a lot of ideas that could potentially help, but there aren’t many that are realistic. I think student loan refinancing would be really good for a lot of people. I also think the policy of FAFSA should be entirely changed because a lot of people get denied student aid, even those who truly need it. It’s based on a number system that seems to be completely skewed. I think it should be changed.

Kevin: It seems like right now a lot of the burden of student debt is falling on the students. The question is, do we want to be moving the student debt burden to the taxpayers? You can…but do you want to burden the taxpayers with the student debt if they’ve personally paid theirs off?

You can watch the full discussion, College Students Discuss the Future of Education, at: https://youtu.be/bHMkQXUrytg

By Lucas Mill, VP of Customer Success at Zogo

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