Click on the link or the image below to enjoy the latest issue of Omaha Federal Credit Union’s monthly e-newsletter. This issue is packed with great articles, news, links and updates and we hope you enjoy this and future issues.
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 CreditKarma, WalletHub, 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.
For more info, please click here.
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.
For more information, please click here.
Open a savings account for your child or grandchild for just $5 and get $25*!
*Referral of New Members 18 years of age and younger Checking account with direct deposit NOT required. Minimum balance of $5.00 in savings account required. Membership approval decision made promptly and, if approved, $25 bonus will be deposited promptly into referring member’s checking account.
**Referral of New Members 19 years of age and older New referral membership, minimum balance of $5.00 in savings account, and checking account with direct deposit IS required for referring member to obtain $25 bonus. Membership approval decision made promptly and, if approved, $25 bonus will be deposited into referring member’s checking account upon referral’s first posting of direct deposit in his/her new checking account.
NEW MEMBERS OF ALL AGES Welcome to apply Limit of $75 bonus per referring member (3 referrals) per offer. Membership depends on meeting certain qualifications. 0.05% Annual Percentage Yield (APY) on savings account and 0.00% APY on checking account. New checking account includes bonus VISA® Debit Card, which (upon registering) accrues 1 bonus point per $2.00 spent when you select “credit” or sign for your purchases wherever you shop. Points can be redeemed for items such as gift cards and merchandise. Maintenance or activity fees and terms could apply. Programs, rates, terms and conditions are subject to change without notice and may change after the new account(s) are opened. Visit omahafcu.org or call (402) 399-9001 and speak to an employee for more details about fees and terms that may apply. Limited-time offer ends June 10, 2021.
Funds in your OFCU accounts are federally insured to at least $250,000 by the National Credit Union Administration (NCUA), a U.S. Government Agency.
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Providing financial education embodies the movement’s ‘people-helping-people’ philosophy. The theme for this year’s Youth Month is “Be a Credit Union Saver and Your Savings Will Never Go Extinct.” Together, we’re encouraging our youngest members to open their own savings account (with a parent or guardian’s help), begin a habit of putting money into that account regularly, and learn how compound interest helps their account to grow.
As more Americans seek financial guidance and more credit unions begin to offer services like financial counseling, it’s essential to consider initiatives that also educate young members. If parents have trouble managing money, you can imagine that it’s going to be even more challenging for them to have conversations about money with their kids. Omaha Federal Credit Union can serve as an important ally for parents in their mission to teach their kids to be financially responsible. Providing this kind of support and education can help build long-term member loyalty.
If you have been wondering how to empower youth to save for their future, National Credit Union Youth Month is a great opportunity to start or boost your youth initiatives! Join us this April as credit unions across the country focus on educating youth about financial health. This year’s kid-friendly theme emphasizes the benefits of wise saving habits using fun dinosaur characters. This celebration is a great time to engage kids at Omaha Federal Credit Union and within your community to help them develop healthy money habits.
You can use your OFCU Debit Card with Apple Pay — the easy, secure, and private way to pay. Use Apple Pay with iPhone 6 to pay in stores without swiping your card and within apps without entering payment and contact information. With Apple Pay, instead of using your actual Debit Card numbers when you add your card, a unique Device Account Number is assigned, encrypted and securely stored. And when you make a purchase, the Device Account Number alongside a transaction-specific dynamic security code is used to process your payment. So your actual Debit Card numbers are never shared by Apple with merchants or transmitted with payment. In addition, paying with Apple Pay is private as the cashier never sees your name, card numbers or security code.
Now the things you love about your favorite Visa® Debit Card are right on your Android phone. Getting started with Google Pay is simple:
- Download the Google Pay app from Google Play or the App Store
- Follow the instructions to add your OFCU Visa® Debit Card
- Verify your card if needed. Then you’re all set!
Now the things you love about your favorite Visa® Debit Card are right on your Samsung phone. Getting started with Samsung Pay is simple:
- Access your Card from the Samsung Pay app
- Add your OFCU Visa® Debit Card
Pay confidently at millions of places around the world with Visa and Samsung Pay.
We spoke with four college students that chose to use a credit union over a bank. Here are the three main findings…
They really cared about credit unions being not-for-profit:
- R: “The charitable donations made by credit unions in my area are awesome. I’m from Texas and when Hurricane Harvey hit, the credit unions in the Houston area all came together and pitched in donations and it really left an impact on me at a young age.”
- C: “The social impact of everything has definitely become more and more important with each generation. Within the past couple of years, I’ve started to care about which businesses I support, for example if a clothing store is ethical and sustainable. In my eyes, this was a huge selling point for my local credit union as they worked with local businesses that believed in the same things I did.”
They saw the membership benefits to credit unions as favorable to banks:
- D: “One of the best things that my credit union offered was lots of scholarships for high school and college students. I was able to get a $500 scholarship myself. Nationwide banks do offer scholarships but literally a million people are applying for them so it doesn’t seem very accessible, but when it’s in your community you know you it’s more attainable.”
- T: “I was pleasantly surprised when I found out that credit unions offer better rates on loans and care about returning money back to members. As part of Gen Z, my financial situation was at the forefront of my concerns, particularly as I was about to move out of my family’s home for the first time. I was keen to both save and grow my money and my local credit union offered the tools to help with both.”
After they learned about credit unions and what they do for the communities, there was no second choice for them. They said the only hurdle is getting the credit union message out to young people (a recent study by Zogo Finance found that 76% of students didn’t know what the function of a credit union was*):
- R: “Growing up I just always found banks more intimidating than credit unions. I was just starting to learn about personal finance and credit unions seemed like they were really willing to explain everything and help me out. I needed that.”
- C: “As mentioned before, the fact that my credit union worked with local and sustainable businesses was a big selling point. However, this fact can get lost due to lack of awareness. I only knew about the community initiatives of my local credit union because my parents also used the same credit union, but I know a lot of my friends have no idea that credit unions are so invested in social change. I think we need to make sure young people know about this.”
For more information, click here.
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.