Knowledge Center

Beneficial Ownership Information Reporting (BOIR) Rule

Starting January 1, 2024, there’s a new compliance requirement that may affect your business.

The Financial Crimes Enforcement Network (FinCEN), part of the Department of Treasury, now requires businesses like LLCs, partnerships, S-Corps, C-Corps, and even single-member entities to report ownership details under the Beneficial Ownership Information Reporting (BOIR) rule.

Here’s what’s required:

  • You’ll need to provide the names and contact information of all members, partners, or shareholders.

  • If anything changes—like a member’s address or the expiration of their ID (driver’s license or passport)—you must update your report within 30 days.

 Why this matters:
Failing to comply could result in heavy penalties, even jail time.

Deadlines:

  • For businesses established before January 1, 2024, the deadline is January 1, 2025.

  • Businesses established in 2024 have 90 days to file

  • For new businesses formed after January 1, 2025, the report is due within 30 days of forming the entity.

The process to file is straightforward and takes about 5 minutes, and the website guides you step by step. Be sure to complete yours by the deadline.

Here’s the link to get started: https://boiefiling.fincen.gov/fileboir

Understanding Your Credit Report and Score

A Guide to Help Lower the Increasing Costs of Owning — or Renting — a Home

Whether you rent or own, mitigating the financial impact of rising home costs can help you manage your budget more effectively.

FOR HOMEOWNERS

Invest in Home Maintenance: Proactive home maintenance can save you money in the long run. Inspect your home for potential issues, such as roof damage or plumbing leaks. Investing in maintenance can prevent more significant, costlier problems down the line and may even lower your premiums.

Consider Increasing Your Deductible: Increasing your deductible can reduce your monthly payments. If you rarely file claims, the savings on premiums can outweigh the higher out-of-pocket costs in the event of an incident. Going this route requires more financial responsibility when making a claim, so it’s a safer option for those with emergency funds. 

Explore Property Tax Exemptions: Many homeowners are unaware of exemptions and rebates that offer substantial savings. Homestead exemptions lower your primary residence's taxable value, while senior citizen, disability, and veteran exemptions reduce taxes. Energy efficiency rebates may also be available for home upgrades. Contact your local tax assessor's office or visit their website to find out where you can save.

FOR RENTERS

Negotiate with Your Landlord: If you're facing a rent increase, talk to your landlord. Discuss your situation openly and explore possibilities for a smaller increase or locking in your current rate for an extended period. Sometimes landlords are willing to negotiate, especially if you've been a reliable tenant.

Consider a Roommate: If your rental agreement allows, consider taking on a roommate or subletting a portion of your apartment. Splitting rent and utilities can alleviate financial strain and provide a more affordable housing option, at least in the short term as you save.

Review and Reduce Utility Costs: Take proactive steps to conserve energy and water usage in your rental unit and consider installing energy-efficient appliances, using programmable thermostats. Ask your providers about budget billing or flat rate plans to stabilize monthly expenses.

FOR BOTH RENTERS AND HOMEOWNERS

Review, Update, and Bundle Your Insurance Policy: Check your coverage limits to ensure your policy adequately protects your home, belongings, and liability risks. Make sure you're not over-insured by removing coverage for items you no longer own or that have depreciated. Additionally, shop around for competitive rates and consider bundling your insurance policies, as this can yield discounted premiums.

Consider Relocation: While uprooting is cost-prohibitive in the short-term, you may not have to move far to find affordable housing that offers long-term sustainability. Many metropolitan areas have nearby cities or suburbs within an hour’s drive that can significantly lower housing costs.

Seek Support: Connect with us to see what resources we provide to support you in optimizing your housing budget. If high interest debt is a barrier to affordable living, our financial wellness partner, GreenPath, provides financial counseling and a debt management program designed to help you become debt-free in three to five years.

10 Ways to Save on Summer Camp

In a perfect world, summer would be a time for children and parents to soak up the sun and enjoy a slower pace. As most of us know, work calendars don’t align with school calendars. Summer camp is a lifesaver for busy households, and costs add up quickly, leaving many families feeling financially burdened. Here are ten strategies for cutting costs this season:

1. Camp Scholarships: Many summer camps offer scholarships or financial aid for families in need. Chat with camp staff to determine your eligibility and submit any required documentation.

2. State Subsidies: Depending on where you live, some states offer income-eligible subsidy programs for qualifying families. Start your search online for local organizations that can steer you to the proper application forms. 

3. Day Camps: Day camps can be significantly cheaper than overnight camps since they don't include accommodation expenses. Look for day camps in your area that offer similar activities and experiences to overnight camps.

4. Sibling + Group Discounts: Do you have more than one camper in your household this year? Or perhaps even other children in your parent group that could add to the headcount? Look for camps that offer sibling and/or group discounts.

5. Community Programs: Most community recreation centers offer year-round low-cost or free programs for children, including day camps, sports leagues, or even virtual experiences led by online educators. Beyond rec centers, check out local offerings at YMCA or Boys & Girls Club.

6. Flexible Payment Plans: Research camps that offer flexible payment plans, allowing you to spread out the cost over several months rather than paying a lump sum upfront.

7. Partial Weeks: Does your schedule allow for partial weeks at camp? Many camps offer the option to enroll two or three days per week (or even on a per-day basis) instead of a full week session. This can make camp attendance more manageable in the short-term, especially if you have summer travel plans.

8. Pack Your Own Supplies: Camps often charge extra for snacks, meals, and supplies. Save money by packing your child's snacks and lunch each day, and ensure they have necessary supplies like sunscreen, bug spray, and water bottles.

9. Flexible Spending Accounts: Some employers may allow allocation of FSA funds to cover expenses if the camp is considered a qualified dependent care expense. Check your specific plan to confirm whether summer camp expenses are reimbursement eligible.

10. Volunteer Opportunities: Some camps offer discounts for families willing to lend their time (similar to co-op programs where parents can assist in classrooms). Helping with administrative tasks or coordinating activities has the secondary benefit of enriching your resume.

The "Overpayment Scam" With a Twist

You may already be familiar with the "overpayment scam," but there's a new twist to watch out for.

Here's how it works: Imagine you apply for a $500 loan with an online lender you've never used before, and it gets approved. The lender — actually a scammer — contacts you, offering an incredibly easy solution. They ask for your mobile banking username and password, promising to deposit the loan directly into your account. Once you provide access, the scammer remotely deposits a check, but here's the catch — it's for more than the agreed-upon loan amount, let's say $900.

Shortly after, the scammer contacts you again, claiming they made an error. They insist that you urgently return the excess amount, in this case $400, using Western Union or a wire transfer. The hope is that you'll send the money before realizing the original $900 check was fraudulent. In the end, you're out $400, plus any fees associated with the returned check, and you're still short the $500 you initially needed.

It's a cunning scheme that preys on trust and urgency, leaving victims in a financial bind.

Back to the Basics of Financial Wellness

Financial wellness is crucial for overall well-being, and Financial Wellness Month (observed annually in January) provides an opportunity to reflect on and improve your financial habits. Here are some pieces of advice for Financial Wellness Month:

  1. Create a Budget: Develop a realistic budget that outlines your income, expenses, and savings goals. This will give you a clear picture of your financial situation and help you make informed decisions.

  2. Emergency Fund: Establish or replenish an emergency fund. Aim for three to six months' worth of living expenses in case of unexpected events like medical emergencies or job loss.

  3. Review and Improve Credit Score: Check your credit report and work on improving your credit score. A good credit score can positively impact your ability to secure loans and better interest rates.

  4. Set Financial Goals: Define short-term and long-term financial goals. Whether it's saving for a vacation, buying a home, or planning for retirement, having clear objectives helps guide your financial decisions.

  5. Automate Savings: Set up automatic transfers to your savings account. This ensures you consistently save a portion of your income without having to think about it.

  6. Review Subscriptions and Expenses: Evaluate your monthly subscriptions and discretionary spending. Cancel or downgrade services you don't use frequently, and look for ways to cut unnecessary expenses.

  7. Invest Wisely: If you haven't already, start investing for your future. Consider consulting with a financial advisor to determine the best investment strategy based on your risk tolerance and financial goals.

  8. Debt Management: Develop a plan to manage and reduce any outstanding debts. Focus on high-interest debts first and consider debt consolidation options if it makes financial sense.

  9. Continued Learning: Stay informed about personal finance. Read books, attend workshops, or follow reputable financial blogs to enhance your financial literacy.

  10. Seek Professional Advice: If you're uncertain about certain financial matters, don't hesitate to seek advice from a certified financial planner or advisor. They can provide personalized guidance based on your unique situation.

Remember, improving financial wellness is an ongoing process. Making small, consistent changes can have a significant impact over time.

To Embody the Frugal Mindset This Holiday Season, Try These Six Essential Strategies

  1. Opting for Quality Over Quantity in Gift-Giving
    Discerning shoppers prioritize meaningful over numerous gifts, selecting items with lasting value and sentimentality. Whether it's a beloved book or a handcrafted treasure, they prefer thoughtful choices over a plethora of forgettable trinkets.

  2. Embracing Homemade and DIY Gifts
    The personal touch of handmade gifts holds a special allure for frugal individuals. Drawing on their own skills, they craft unique presents like baked goods, knitted scarves, or custom artwork. These gifts not only save costs but also carry an irreplaceable personal sentiment.

  3. Sustainable Holiday Decor Choices
    Frugal decorators invest in energy-efficient LED lights and reusable decorations. Not only do these choices save money in the long run, but they also contribute to a more eco-friendly holiday experience. Creative, sustainable ideas like natural wreaths and homemade ornaments take center stage in their festive displays.

  4. Economical Holiday Meals Planning
    Frugal planners organize holiday meals that are both scrumptious and cost-effective. They may suggest potluck-style gatherings to share costs and cooking responsibilities or seek out budget-friendly recipes that still tantalize the taste buds.

  5. Prioritizing Practical and Useful Gifts
    Frugal gift-givers favor items that recipients can integrate into their daily lives. Whether it's quality kitchen tools, durable clothing, or useful subscriptions, practicality and longevity are key considerations when compiling their gift lists.

  6. Seeking Discounted Holiday Travel Opportunities
    Smart and frugal holiday travelers keep a vigilant eye on the best travel deals. Planning and booking in advance, they take advantage of early-bird specials and off-peak pricing to make holiday visits and vacations more affordable.

"Did You Just Charge $3,178 On Your Credit Card? Reply Yes Or No" - How To Avoid Text Scams

COLLEEN KELLY, Senior Federal Compliance Counsel, Credit Union National Association

If you are like me, no matter how much I learn about text scams, when I get the one that says, for example: “Credit Union Alert: Did you attempt a wire transfer of $4690.00? Reply YES or NO” my stomach drops, my adrenaline surges, as I scramble to deny the transaction. But will denying the transaction actually leave me vulnerable to fraud? As text scams become more sophisticated, it is getting increasingly difficult to identify the “real” from the “fake”.

A new analysis from the Federal Trade Commission (FTC) shows that fake financial institution fraud warnings were the most common form of text message scams reported to the agency in 2022 - nearly twenty times the number since 2019. These texts are designed to create a sense of urgency, often by asking people to verify a large transaction they did not make. Those who respond are connected to a fake financial institution representative. If you are targeted by this scam, you might get a fake number to call about supposed suspicious activity, or you might be asked to reply “yes or no” to verify a large transaction (that your member didn’t make). If you reply, you may get a call from the (fake) “fraud department”.

According to the FTC’s report, victims state that they thought the financial institution was helping them get their money back. Instead, money was transferred out of their account. Worse still, many people report giving their Social Security number and other personal information to scammers, leading to possible identity theft. Even educated people who know better than to give personal information over the phone or through text have found themselves victim to these scams by simply clicking on a link to refuse the transaction. Oftentimes this link installs harmful malware onto their phone, which steals personal and financial information without the victims even realizing it.

The FTC reports that this scam is increasingly popular because “texting is cheap and easy, and scammers are counting on the ding of an incoming text being hard to ignore.” After bank impersonation, the most frequently reported text scams were:

• messages claiming to offer a free gift, often from a cell phone carrier or retailer

• fake claims of package delivery issues from the USPS, UPS, or FedEx

• Amazon security alerts.

To combat this growing financial crime, CUNA is urging the Federal Communications Commission (FCC) to require mobile wireless providers, and entities that originate text messages, to investigate and potentially block texts from a sender after they are on notice from the FCC that the sender is transmitting suspected illegal texts. Additionally, CUNA has urged the FCC “to work with mobile wireless providers, and other entities involved in the texting ecosystem, to design an authentication framework that prevents criminals from successfully sending text messages that impersonate legitimate companies,” while at the same time ensuring that text messages from legitimate companies are not blocked.

To avoid text scams, we remind you to:

• Never click on links or respond to unexpected texts. If you think the text might be legitimate, contact the organization using a phone number or website you know is real. Never use the contact information provided in the text message.

• Filter unwanted texts. Your phone may have the option to filter and block spam or messages from unknown senders.

• Never give personal or financial information in response to a request that you didn’t expect. Honest organizations won’t call, email, or text to ask for personal information, such as Social Security number, credit union account information, or credit card numbers.

• Stop and talk to someone you trust. Before you do anything else, tell someone — a friend, a family member, a neighbor — about the text. Talking about it could help you realize it’s a scam.

Mapping Out The Journey To Come

Keeping a roadmap handy makes the journey to adulting a little less scary. Browse our college planning resources that help students and their families prepare for a successful trip.

From Puppies to Tech Support: 10 Scams Targeting Older Members

by Colleen Kelly, CUNA Compliance

June is Elder Abuse Awareness month, an excellent time for credit union members to brush up on the latest scams targeting older people. Up to five million older Americans are abused every year, and the annual loss by victims of financial abuse is estimated to be at least $36.5 billion. People over 60 are often the targets of criminals because they are more financially secure, they may experience memory issues, and they tend to be more trusting. The following is a review of ten popular scams against older individuals:

1. The Grandparent Scam: The Grandparent Scam may be the most devious because it takes advantage of many older adults’ biggest vulnerability – the love of a grandchild, and the fear of putting them at risk. Scammers will place a call to an older person, saying something like: “Hi Grandma, do you know who this is?” When the unsuspecting grandparent guesses the name of the grandchild the scammer sounds most like, the scammer has established a fake identity without any effort or background research. Once the grandparent “correctly guesses” which grandchild is calling, the scammer will usually ask for money to solve some unexpected financial problem, such as overdue rent, payment for car repairs or even a hospital bill because the grandchild has been in an accident. The funds must be paid via Western Union, MoneyGram, or other similar method. The scammer will also beg the grandparent, “please don’t tell my parents, they would kill me.”

2. The Puppy Scam: Seniors can be particularly vulnerable to pet scams, especially if they have suffered the loss of a loved one and are looking for a companion. Generally, using the internet, a scammer posts a picture of an adorable puppy that is available for an unbelievably low price. There’s usually a heart-breaking background story about why the cute puppy needs a new home ASAP. Once the older person makes contact with the seller (scammer), there will be a number of fees — such as payment of up-front adoption fees, shipping costs, etc. — that must be paid via wire transfer or prepaid debit cards. Then, after those fees are paid, there are often additional fees and multiple delays — such as insurance costs, specialized veterinary care, quarantine costs, etc. In reality, there was never a puppy, and the victim’s money is gone.

3. The Tech Support Scam: Tech support scams targeting older adults are on the rise. Scammers often pose as support or service representatives, offering to resolve issues related to a compromised email, financial account, virus on a computer, or even a software license renewal. These scams usually start with a phone call or a pop-up warning of a computer problem that gives a number to call. The scammers often claim to be Microsoft or Apple – they may even spoof caller ID to make it look like one of these companies really is calling. In another twist, they get people who actually do need computer help to call them by posting phony customer support numbers for well-known companies online. These scammers convince people to hand over remote access to their computer and then make a big show of “troubleshooting.” They may open system folders or run scans that seem to show evidence of a problem. Then they ask for money for supposed repairs and things like fake service contracts.

4. Online Romance Scams: Romance scammers usually create fake profiles on dating websites and on social media sites. While they can be hard to spot, the tactics they use are pretty common, for example:

  • They claim to be living or traveling outside the United States, which allows them to avoid meeting with victims in person.

  • They quickly escalate the relationship by using lots of flattery, professing love and asking to move conversations off the dating service so they can communicate directly by text or email.

  • They make plans to meet in person, but always come up with excuses not to meet.

  • They claim to have a medical emergency or unexpected expense and ask for money. They also might ask for money to pay for a trip together or to come visit. They typically ask for money to be wired or to buy a gift card or cash reload card and provide them with the card number.

5. “The Pigeon Drop”: This scam can take on various scenarios. Generally, the scammer tells the potential victim (“the pigeon”) that they have found a large sum of money and are willing to split it if the victim will make a show of “good faith” by handing over cash to the scammer to hold while they are determining how to split the money. For example, this scam often occurs in a store parking lot, where the scammer approaches the selected victim, usually an older person, and claims that they have just found a bag, briefcase or envelope and asks whether it belongs to the victim. When they look inside the bag for identification they find what appears to be a large amount of cash with some indication that it comes from an illegal activity, such as gambling or drug money, so returning the money is impossible. The final step is the request that each of the people who "found" the money offer some kind of deposit of their own money to show good faith that they will split the money. Once the victim provides their “good faith” cash, the scammers deftly switch out the “found money” for a look-alike bag or envelope full of useless paper. The scammers are long gone with the victims “good faith” money before the victim determines that the “found money” has been switched.

6. Email/Phishing Scams: In this scam, a senior receives email messages that appear to be from a legitimate company or financial institution, asking them to “update” or “verify” their personal information. In one of the variations of this scam an older member may receive an e-mail that appears to be from the IRS about a tax refund and requests personal information to receive the funds. As you know, the IRS never sends such e-mails.

7. Investment Scams: Because many seniors find themselves planning for retirement, a number of investment scams have been targeting seniors as they are looking to safeguard their cash for their later years. From pyramid schemes like the one that made Bernie Madoff infamous to stories of a Nigerian prince looking for a partner to claim inheritance money, investment schemes have long been a successful way to take advantage of older people.

8. Homeowner Related Scams: Scammers like to take advantage of the fact that many people above a certain age own their homes, a valuable asset that increases the potential dollar value of certain scams. A couple of home-related scams include:

  • A property tax scam where scammers send personalized letters to different properties apparently on behalf of the County Assessor’s Office. The letter, made to look official but displaying only public information, identifies the property’s assessed value and offers the homeowner, for a fee, to arrange for a reassessment of the property’s value and therefore the tax burden associated with it. The fee must be paid in advance, and after payment is made the victim never hears from the “Assessor’s Office” again.

  • With legitimate reverse mortgages on the rise, scammers are taking advantage of this new popularity. As opposed to official refinancing programs, however, unsecured reverse mortgages can lead property owners to lose their homes when the scammers offer money or a free house somewhere else in exchange for the title to the property.

9. Sweepstakes & Lottery Scams: This simple scam is one with which most credit unions are familiar. In this one, scammers inform the older member that they have won a lottery or sweepstakes and must make some sort of payment, for example to cover the taxes, before they can collect the winnings. To lend credibility to the scam, seniors will often be sent a check, representing partial payment of the winnings, that they can deposit into their credit union account. Before the check has time to be rejected as fraudulent, the scammers will quickly collect money from the older member for the supposed fees or taxes on the prize. When the check bounces, the scammers are long gone and member is out all of the “tax and fee’ money they paid the scammers.

10. Funeral Scams: The FBI warns about two types of funeral-related fraud often used against seniors. In the first one, scammers read obituaries and call or attend the funeral service to take advantage of the grieving widow or widower. The scammer claims that the deceased had an outstanding debt with them, and will try to extort money from relatives to settle the fake debts. In another common scam, funeral directors will insist that an expensive burial casket is necessary even when performing a direct cremation. In reality, cremation can be accomplished with an inexpensive cardboard casket.

Safe Online Shopping

“With the recent pandemic and the shift to online shopping, we saw an increase in fraudulent e-commerce transactions,” said Kevin Hood, EVP of IT and Compliance at 1st University Credit Union.  “According to TransUnion, it was estimated that 26% of transactions that took place on Cyber Monday of 2020 were fraudulent and those trends are expected to continue.”

We’ve put together these eight tips from the National Cybersecurity Alliance to help you stay safe while shopping online.

PATCH YOUR DEVICES – The first step is making sure you’re working with an updated device.  Whether you shop from a mobile phone, tablet, or PC, it is very important to ensure you have the most up-to-date security patches.

DO NOT USE PUBLIC WI-FI – Never login to a secure site such as your credit union online banking or provide any payment card details over a public Wi-Fi connection.  Anyone could be listening.  If available, always use a VPN connection.  If not, use the data plan from your mobile device or wait until you are on your secure home network.

THINK BEFORE YOU CLICK – If an offer sounds too good to be true, don’t click on it.  Instead, open a new browser and go directly to that company’s website to look for the deal. And always make sure you see the “https://” in the address bar.

USE UNIQUE PASSWORDS FOR EACH SITE – I know this sounds painful, but you should always use a different password for different sites.  This way, if one retailer is breached, they won’t have your login for others.  Also, if the retailer offers multifactor authentication (MFA) such as through a one-time text code to your phone, sign up for it.  This adds an extra layer of protection from the cyber criminals.

DO YOUR HOMEWORK – There are many fake websites out there.  Research an unknown retailer before purchase.  Better yet, stick with the well-known sites.  If unknown, look for reviews, company details, and a customer service number.  You may even go so far as to call the customer service number and ask questions.

CONSIDER YOUR PAYMENT OPTIONS – If you have the option, using a credit card is safer than using your debit card as there are more consumer protections available for credit cards when fraud occurs.  There are also other third-party payment services available so that you do not have to give your card numbers directly to the retailer.

DON’T GIVE TOO MUCH INFORMATION – If you feel the retailer is trying to collect too much information, cancel the transaction.  You should only complete the required fields in order to checkout.  And avoid saving your payment information to their website - if they automatically save your payment information, go into your profile after the transaction and delete it.

MONITOR YOUR ACCOUNTS – Finally, keep a close eye on your credit union accounts and credit card accounts.  This is a good tip year-round, but especially during the holiday shopping season.  If available, sign up for account alerts that will send you an email or text message if your card is used.

While nothing can be 100% secure, following these tips can keep you as safe as possible from Mr. Grinch this holiday season. 

For more tips you can check out these resources:

Cybersecurity & Infrastructure Security Agency: Cybersecurity Tips

https://www.us-cert.gov/ncas/tips

Cybersecurity & Infrastructure Security Agency: Shopping Safely Online

https://www.us-cert.gov/ncas/tips/ST07-001

Federal Trade Commission: Online Security

https://www.consumer.ftc.gov/topics/online-security

Save Money at the Gas Pump

With the overall cost of operating a vehicle — fuel, maintenance and insurance — going up every year, it pays to squeeze as much out of every gallon of gas that you possibly can. Here are some tips that will help you save money at the pump:

  • Keep your engine properly tuned.

  • Clean or replace the air filter.

  • Properly inflate your tires (this can save as much as 2-3% on gas mileage).

  • Ease up on the gas pedal.

  • Don’t drive with your windows rolled down. Use the vents for outside air or air conditioning to cool the vehicle. Most new cars are designed to be more aerodynamic with the windows closed. For highway driving, most new cars will actually get better mileage “closed up” with the air conditioning on.

  • Use cruise control on longer trips or open stretches of highway.

  • Anticipate traffic situations and “roll” toward them with your foot off the gas, rather than speeding toward them and jamming on the brakes at the last second.

  • Plan ahead when running errands to avoid unnecessary trips.

What is Estate Planning?

Estate planning is the process during which you review your current situation and identify the alternatives available to establish and accomplish your personal and financial goals. Estate planning assists you in making informed decisions about the ownership and distribution of assets during your lifetime and upon your death. It is often the first step in the preparation of a properly drafted Will.

Why should I plan my Estate?

You spend a lifetime acquiring and safeguarding assets. You care for your family and others who depend upon you. Unless you properly plan your estate, the objectives you established during your lifetime will not be met after you are gone. With a well-planned estate and a properly drafted Will, your assets will be distributed in accordance with your wishes. Your beneficiaries' needs will be met. Your estate will not be subject to unnecessary administration costs, legal fees or taxes.

Factors to consider

Estate planning is a personal process and reflects your unique situation. When working through the estate planning process you will be asked to consider a number of issues:

  • What assets do you own and how are they registered?

  • What debts do you owe and will there be sufficient assets to meet those obligations in the event of your death?

  • Who has the time, knowledge and experience to act as your estate representative?

  • What are the needs of your beneficiaries?

  • How do you want your assets to be distributed?

  • Do you wish to leave special gifts such as family heirlooms, to specific beneficiaries?

  • Are you aware of the tax considerations associated with your assets and the distribution you are planning?

Who will be willing to accept the responsibility to act as guardian for those who are dependent upon you?

Understanding Your Credit Score

Source: FICO

What is a Credit Score? In a nutshell, your credit score is a number that predicts how likely you are to pay back a loan or other credit obligations in a timely fashion. Scores generally range from 300 to 850 — the higher the score the better.

Your credit score is calculated from the data — your payment history, use of available credit, plus other factors — in your credit reports housed at the three main credit bureaus: Experian, Equifax, and TransUnion.

Credit scores are dynamic and can change up or down when your data at the credit bureaus changes. And they're calculated in real time so they're current as of the time you or a lender (or employer, landlord, insurance company, utility provider, or government agency) requests them. To get your free credit report, go to annualcreditreport.com.

Your score does not determine whether you're approved for credit or what interest rate is assigned — that's up to the lender — but it does help the lender make that credit granting decision. As important as they are, your credit score isn't typically the only information lenders use. They may also consider your income, employment history, the value of your collateral such as your home or car or any existing relationships the lender has with you.

So, why do credit scores matter to you? It makes the lending process faster and fairer. You’ll get faster answers from lenders since credit scores streamline the application process. And it’s fairer because it applies the same set of standards to all borrowers. In the end, credit scores provide you with more credit choices at competitive rates.

What Goes into a Credit Score

Credit scores focus on five key categories:

1. Your payment history (35%)

Have you missed any payments? If so, how often? How recently? And how late were they? Have you had debts turned over to a collection agency? Do you have foreclosures, or have you filed for bankruptcy? The more recent, frequent, and severe the reported negative items are, the bigger the impact on your scores.

ADVICE: Pay your bills on time. If necessary, set up automatic alerts as payment reminders. Missed payments, especially recently missed payments, can substantially impact your score, so it's important to get and stay current.

2. How much you owe (30%)

Next, there's the debt you're already carrying: Are your credit cards nearly maxed out? How many accounts with balances do you have? How much of your available credit is being used? If you're overextended, are you likely to miss future payments?

ADVICE: Keep credit card balances well below credit limits. Pay off debt, don't just move it around. Avoid short-term gimmicks such as closing unused accounts or opening new ones just to increase available credit. These tactics may have the opposite effect of what was intended. In other words, only apply for new credit accounts when needed.

3. How long you've had credit (15%)

Your credit history is composed of: the age of your oldest account, the age of your newest account, and an average age of all your accounts; how long specific credit accounts have been open; and how long it has been since the account has been used.

ADVICE: Think of the length of your credit history as part of your greater long-term credit strategy. Since it takes credit to get credit, consider getting started with a secured credit card.

4. If you've recently sought new credit (10%)

Credit scores also consider how often you've actively applied for credit in the past year. “Rate shopping” is accommodated for, and promotional, insurance and employment inquiries don't count against you.

ADVICE: When shopping for a home, auto or student loan, do it over a short period, so the inquiries get treated as a single search for credit. This tactic is often known as "rate shopping."

5. The types of credit you've used (10%)

Do you have different types of credit accounts – mortgages, loans, credit cards, etc.? Lenders like to see that you have been able to manage different types of credit accounts responsibly over time.

ADVICE: Don’t open credit accounts you don’t need, but do try to have a mix of revolving and installment credit accounts.

Last piece of advice: Request your credit report from each credit bureau at least one time each year — get it for free at www.annualcreditreport.com. Check it for accuracy, and if you find an error, contact the credit bureau whose report has the mistake and dispute the error.

Bankruptcy - Don't Make a Ten Year Mistake

Consumer debt is at an all time high and record numbers of consumers are filing for bankruptcy. If you find yourself over-extended, you are not alone. Whether your current debt problems are the result of an illness, unemployment, or overspending, falling behind financially can seem overwhelming.

Although bankruptcy is one option to deal with financial problems, it is generally considered the option of "last resort."

A bankruptcy remains on your credit report for 10 years and can seriously hinder your future ability to get credit, a job, insurance rates or even a place to live. Normally, it is not until two years after a bankruptcy discharge that consumers are eligible for mortgage loans with terms as good as those for others with the same financial profile that have not filed for bankruptcy.

Some of the other disadvantages of bankruptcy to consider are:

  • Further credit may be very difficult to obtain and may require collateral to secure a loan. The interest rate will normally be substantially higher as well.

  • Greater difficulty purchasing a home or even a rental without a substantial down payment.

  • Greater difficulty purchasing or renting a home without a substantial down payment.

  • Greater difficulty obtaining checking account relationships.

  • Bankruptcy filings can be very lengthy in process – in some instances they can disrupt your personal life for several months.

  • A credit card or debit card is a necessity for conducting your normal business activities and they may be difficult to obtain without collateral and also at an increased interest rate.

For help and other alternatives contact us here at 1st University Credit Union, 1-877-377-2797 or 254-752-2797.

How to Manage Your Checking Account

If you’re like most people, when you write a check - or share draft - it's so automatic and works so well you probably don’t think much about it. And once you establish good checking habits, you don’t need to think much about it. Check and share draft systems run smoothly when people follow common rules.

How to write a check

Direct deposit protects you from theft, but a forger still can use your stolen checks or discarded deposit slips, and “your” signature, to steal from your account. You also should develop good habits to reduce the possibility that honest errors will result in mistakes in your account. Risk management experts offer these suggestions:
1. Don’t use pencil or erasable ink. Avoid ink colors other than blue or black. Some credit unions record cleared checks on microfilm, which doesn’t show red ink clearly, for example.
2. Use the correct date. Even a postdated check can be deposited for payment.
3. Don’t make out a draft or check to “cash.” This allows anyone to cash it. Instead, write in the name of the cashing institution or your own name.
4. Draw a line after the name of the party who’s supposed to get the money. This prevents a thief from becoming an alternate payee by adding the word “or” and an alias.
5. Don’t use abbreviations on the payee line. A clever forger can change such terms as “Co.” or “Inc.” into believable names.
6. Print figures as close to the preprinted dollar sign as possible. This makes it hard to raise the amount by inserting a digit, for example, changing $ 25 to $125. Don’t think only large, obvious amounts are at stake. One credit union teller described a fraud where a grocery clerk raised the amount on checks by $10. For example, she would insert the number 1 before the 9 in $9.32 and squeeze the word “teen” between the written “nine” and “32/100.” The clerk pocketed $10 from the cash drawer several times a week.
7. Print the written amount in capital letters, which are much harder to alter than script. Print the amount beginning at the extreme left and draw a line through the rest of the amount space. Otherwise, TWENTY-FIVE could become ONE TWENTY FIVE or TWENTY-FIVE HUNDRED.
8. Develop a form of your name to use only when you sign share drafts, checks, and other documents. For example, if you’re known as “Ed Miller,” reserve “Edward Miller” for share drafts. With this special signature on file and on your driver’s license or similar identification, anyone who presents your draft for payment with any other form of your name will be suspect. And, a forger will need more than your personal correspondence to copy your signature.
9. Sign your name rapidly, freely, and legibly. Connect all letters and avoid elegant flourishes. Play with decorative signatures on personal correspondence if you like, but keep your legal signature consistent.
10. If carbonless copies of written share drafts don’t “block out” your signature, obscure your signature on used drafts. Prevent leaving an impression of your name on the following check by filling in each check except for your signature, then removing the draft from the pad and signing it on a hard surface.
11. Never pre-sign your share drafts or checks.
12. If you make a mistake, write a correction and initial it if you can do so neatly. If not, rip up the share draft, mark it “void” in your register, and start over.
13. Deposit funds before you write the check they’re supposed to cover. The Check Clearing for the 21st Century Act (Check 21) cut the time it takes a check to clear from days to hours. Remember that your account balance changes continually as transactions clear. So don’t rely solely on your balance from an ATM (automated teller machine) receipt or from a phone call to the credit union. Ask at the credit union about overdraft protection.

How to deposit a check

You must endorse - sign - a check before you can deposit it. If there’s an error in your name on the face of the check, you must endorse the check showing the error. Then sign your name correctly just below the first signature for verification. Often, you’ll use a “blank” endorsement by simply signing your name as shown on the face of the check. The problem with a blank endorsement is that it makes the check negotiable by anyone presenting it for payment. Anyone finding a lost, endorsed check can cash it for its face value.

You can protect yourself if you specify that a check is “for deposit only” above your signature; this is called a restrictive endorsement. Another common endorsement is “special” and limits the use of the check. You can use the special endorsement “pay to the order of” and then name the person to whom you’re signing over the check; remember to include your signature. When you deposit a check, you may not have access to the funds right away. The Expedited Funds Availability Act determines how long an institution may “hold” a check before crediting your account. Your credit union will inform you of its funds availability policy. Holds vary based on where you deposit your check (with a teller, by mail, or at an ATM), and where the check is from (the government, a local party, or out of state, for example). The staff at your credit union can answer your questions and help you develop good share draft habits. Ask them for help when you have questions.

How to reconcile your account

1. Start with the balance in your register. __________
2. Subtract any service charges that are on the statement. - __________
3. Add any dividends your account earned. + __________
4. This is your new register balance: __________
5. Start with the end balance from the statement. __________
6. Add recent funds you’ve deposited not on the statement. + __________
7. Subtract the total of all drafts written but not cleared, debit card transactions, and ATM withdrawals since the statement. - __________
8. Your new balance: __________

Your account reconciles when your register balance (line 4) matches your new balance (line 8).

How do I get a copy of my credit reports?

Source: Consumer Financial Protection Bureau

You have the right to request one free copy of your credit report each year from each of the three major consumer reporting companies (Equifax, Experian and TransUnion) by visiting AnnualCreditReport.com. You may also be able to view free reports more frequently online.

You can request and review your free report through one of the following ways:

You can request all three reports at once or you can order one report at a time. By requesting the reports separately (for example, one every four months) you can monitor your credit report throughout the year. Once you’ve received your annual free credit report, you can still request additional reports. By law, a credit reporting company can charge no more than $14.50 for a credit report.

You may be able to view free credit reports more frequently online. When you visit AnnualCreditReport.com , you may see steps to view your updated credit reports at no cost, online. This gives you a greater ability to monitor changes in your credit. If needed, you can also ask whether your credit report is available in your preferred language.

You are also eligible for reports from specialty consumer reporting companies. We put together a list that includes several of these companies so you can see which ones might be important to you. You have to request the reports individually from each of these companies. Most of the companies in this list provide a report for free every 12 months. Other companies may charge you a fee for your report.

You can get additional free reports if any of the following apply to you:

  • You received a notice that you were denied credit, insurance, or employment or experienced another “adverse action” based on a credit report. In this case, you have a right to a free report from the credit reporting company identified in the notice. To get the free report you must request it within 60 days after you receive the notice. Other types of “adverse action” notices you might receive include notice of an unfavorable change in the terms or amount of your credit or insurance coverage, or unfavorable changes in the terms of your employment or of a license or other government benefit.

  • You believe your file is inaccurate due to fraud.

  • You have requested a credit report from a nationwide credit reporting company in connection with placing of an initial fraud alert on your credit file (you may request two free copies for an extended fraud alert).

  • You are unemployed and intend to apply for employment within 60 days from the date of your request.

  • You are a recipient of public welfare assistance.

  • Your state law provides for a free credit report.

Tip: Be cautious of websites that claim to offer free credit reports. Some of these websites will only give you a free report if you buy other products or services. Other websites give you a free report and then bill you for services you have to cancel. To get the free credit report authorized by law, go to AnnualCreditReport.com or call (877) 322-8228.