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Changes In The VantageScore System

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The VantageScore system is getting an overhaul. Many people wonder what kind ofa1522-credit2breport changes are being made and how will this affect the way their score is calculated.

The VantageScore, which dictates the way credit bureaus — Experian, TransUnion and Equifax — determine your credit score, is going through a shake-up this fall. The company is looking deeper into specific circumstances and what they say about your financial responsibility.

Having a favorable credit score comes into play when you need to qualify for financing on a new car, if you’re opening a new credit card, or you want to take out a loan. In each of these scenarios, your credit score is the most important deciding factor for your approval, and will also influence your terms and interest rates.

It’s important to note that the new system will not impact mortgage loans. This is because few mortgage lenders use VantageScore; most use FICO scores to verify eligibility.

The changes will affect the credit scores of many people, though, for better or for worse. It’s wise to learn all you can about these changes so you can make the necessary adjustments to your credit behavior.

Lucky for you, we’ve made it easy! We’ve broken the changes down into the three main areas they impact, and then we’ve simplified it by telling you what these changes mean for you.

Read on to learn all about it!

1.) Trended data and trajectories

What it means:

Under the modified system, VantageScore won’t just check if you’re meeting your minimum monthly payments; it will consider trended data, too. This means the company will analyze the trajectory of your debts on a month-to-month basis. They want to know the direction in which your finances are going. Are you gradually paying down debt, or are you scraping by with the minimum payments as your balance slowly grows?

What it means for you:

In the past, your score wasn’t affected by growing debt as long as you were making the minimum payments on your cards. Now, if you’re careful about making the monthly payment but your balance is increasing each month, your credit score will take a hit.

Conversely, if you’re working toward actually paying down your debt, your score will likely get a boost. If you don’t fall into this category, it’s time to get serious about doing away with your debt for good. Even small steps toward this goal will be recognized and rewarded.

2.) Large credit lines

What it means:

Having lots of available credit was once considered a mark of good credit. After all, if the companies deemed you responsible enough to merit all that credit, it’s gotta be a good thing, right? Well, not anymore.

With the new system in place, VantageScore will mark a borrower negatively for having excessively large credit card limits. The theory behind this rationale is simple: lots of open credit means the borrower can quickly rack up a huge bill.

What it means for you:

If you enjoy an excellent credit score, you likely have a large line of credit available and will be negatively impacted by this change unless you take action. This change also upends the old advice that the more credit cards you have open, the better. The rationalization behind that maxim was to build your available credit, and thus, improve your score. With the modified system, though, the opposite is true.

Let’s say Bob has $4,000 in credit card debt with a $40,000 limit across several cards. He’s only using 10% of his available credit. In the past, this would net him a higher credit score. Bill, on the other hand, has $1,500 in debt out of an $8,000 limit. In the past, this modest credit limit would lower his score.

With the new changes in place, the realities are shifting. Bob, who has a lot more available credit, will likely score lower than Bill, who only has $6,500 available to borrow.

Aside from those who enjoy prime credit scores and have several open cards, this change will also affect people who enjoy playing the credit card rewards-and-points game.

Whichever category you fall into, it’s best to use less than 30% of your available credit. Also, if you have a large credit line open across several cards, consider closing some of your cards to lower that number. Finally, if you’re thinking of opening a new card in the near future, ask for a smaller credit limit over a larger one.

3.) Medical debt, tax liens and civil judgments

What it means:

Medical debt, tax liens and civil judgments will no longer be factors at play when determining your credit score. These elements are being removed with the rationale that they often harm a credit score prematurely and are later proven erroneous. Civil judgments and tax liens are often inaccurate, and can significantly lower one’s score before the error is corrected. Similarly, medical debt can hurt credit scores before insurance can reimburse the borrower for the payments.

What it means for you:

If you’ve had any of the above dragging down your credit score, you have cause to celebrate. In fact, you might even see a jump of as much as 20 points to your score! On the flip side, if you have negative marks from things like delinquencies and debts that have gone to collection agencies, this new rule won’t help you much.

If you are looking for a way to track your credit score for free, take a look at WalletHub.*

*Please note: WalletHub gives you TransUnion and VantageScore credit scores.  Not all lenders use TransUnion, so your score when you apply for a loan may be different.

Your Turn: Do you think the new system encourages responsible use of credit? Why or why not? Share your thoughts with us in the comments!

SOURCES:
http://onemileatatime.boardingarea.com/2017/04/19/credit-score-changes-2017/  
http://www.cnbc.com/2017/04/19/major-changes-coming-to-how-your-credit-score-is-calculated.html   
https://amp-usatoday-com.cdn.ampproject.org/c/amp.usatoday.com/story/100653342/   
http://www.pressherald.com/2017/04/24/changes-coming-in-the-fall-to-how-major-credit-score-is-calculated/
https://www.thepennyhoarder.com/smart-money/changes-might-raise-your-credit-score/
https://www.nerdwallet.com/blog/finance/vantagescore-fico-score-the-difference/
https://thepointsguy.com/2017/04/changes-credit-score-calculations/ 

Good Ideas, Bad For Credit: How Your Responsible Choices Can End Up Hurting Your Credit Score

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I’ve had some trouble with credit in the past, but I’m trying to turn over a new leaf. I think I’m doing everything right, but my credit score still isn’t rising! What gives? 

Credit scores can affect you more than you know. Employers look at credit scores. Landlords look at credit scores. Bill providers look at credit scores, and they might decide to charge you if yours gets too low. With all this pressure, you’ve no doubt started working on some good habits for improving your credit score. You pay your bills on time, are sure to not max out your credit line and work hard not to default on a loan. You might be surprised to find out that some actions you take to improve your credit score are actually hurting it. 

If your credit score isn’t where you want it to be, it might be due to one of these habits. Read on for four good ideas that might actually be hurting your credit score:

1.) Debt settlement

Settling your old debt can seem like an easy way to get out of a sticky situation. You make an agreement with a third party, pay a part of your debt and the owner writes off the rest of it.

However, unless it’s at least 90 days since the debt was due, it’s always better for your credit score to pay the debt back in full yourself. Settling a debt for less than you owe can take your credit score down as much as a hundred points. This happens because the debtor only took your settlement on the assumption they’d never see the full amount you owed. Future lenders worry that they’ll end up in the same situation, and that makes them hesitant to lend.

2.) Turning down credit

It might seem like a good idea to reject a higher credit limit. If your credit card offers to boost your limit, that might seem to indicate you have more money to spend. If you’ve struggled with responsible credit management in the past, you might want to turn it down in an effort to keep your spending in check. Keeping your credit limit low can give you a budget and a sense of security regarding when you’ll stop yourself from spending.

However, a higher credit limit does come with benefits. To be exact, it can boost your score quite a lot through a something called a credit utilization ratio. That’s the ratio of your credit card balance to your credit card limit. The less you spend relative to what your limit is, the higher your score in terms of this one factor. That means, if you have a higher credit limit, you’ll be using less of it, and therefore increasing your score.

3.) Avoiding credit cards

With all this rigmarole and paperwork, many people might think it’s easier to just not have a credit card at all. While it might make your life simpler at first, it can complicate your relationship with credit in the future. You might not need credit for day-to-day things like buying groceries or gas, but you will need it for a home loan, auto loans and to prove to potential landlords and employers that you can be trusted. So long as you’re paying everything on time and not carrying a high balance, a credit card is much more beneficial in the long run.

4.) Closing paid accounts

Paying off a credit card can be a big struggle. Once it’s over, your instinct might lead you to throw it away, burn it or otherwise have it completely out of your life once and for all. Credit reporting agencies say something different, though. Since 15% of your credit score is the length of your credit history, you want to keep your cards for as long as possible.

Additionally, your credit utilization score is worth 30% of your total score. Closing a credit card account also kills available credit, which lowers that balance-to-limit ratio. You can destroy the card itself and delete its record from online shopping sites to be certain you’ll never accidentally use it, but don’t cancel it. Even after all that, you should keep the account open (provided there’s no annual fee attached to it), just to keep your score up.

Credit scores have never been easy. There’s an endless number of twists, turns and troubles to keep in mind. It may seem like there’s no one on your side in this struggle. Yes, you have to be in charge and be responsible enough to pay everything on time. Destinations Credit Union can help. Call, click, or stop by today to get help with budgeting, credit management or debt consolidation.

You don’t have to go it alone.

Your Turn: Any tips or tricks you use for managing debt and/or improving your credit score? What has seemed to work or not worked?

Your Credit Score: The (Other) Key To Your New Home

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Each potential home buyer dreams of the day they’ll finally get the symbol of independence, security and prosperity: the key to the front door of their new home. Before you get that one, though, there’s another key you need to craft. Your credit score, a numerical representation of your credit history as an indicator of your ability to pay your bills, will determine a lot about your housing situation, from how much house you can afford to the interest rates you’ll receive.
Your credit score is determined by three different credit monitoring agencies: TransUnion, Equifax and Experian. Each has its own method for determining which events are most important to your score, so your number may vary depending upon the agency. Paying debts off, making payments on time and using only a small percentage of your available credit make your score go up. Missing payments, opening many credit accounts or carrying a significant balance of debt from month-to-month will decrease your score.
Less important than the actual score is your score grouping. Lenders tend to lump borrowers into four categories: sub-prime, near-prime, prime and super-prime. Different lenders break these categories down at different score points, but the terminology and treatment are fairly universal. Super-prime lenders get the lowest rates, because they represent the lowest level of risk for the lender. Sub-prime and near-prime borrowers will have a lower cap for the size of the loan they can take and will generally pay a higher interest rate. If you’re working on raising a low credit score, a good target number is 640. This will generally put you in the prime group and ensure you don’t have to pay extra on your mortgage because of credit. If you’re building good credit, 740 is generally the lowest super-prime score, which will give you access to some of the best rates and terms available.
If you’re going house-hunting in the next year, there are three steps you can take right now to improve the terms of your mortgage. Check your credit score, take steps to raise it and manage your loan in other ways. Taking these three steps will put you on the fast track to affordable home ownership! 
Check your credit score 
You can check your credit report for free once a year at annualcreditreport.com. Note, though, that there may be a nominal fee to receive your actual score along with the report. There are many similar websites, but many of them will charge you. Annualcreditreport.comis the site created by the three credit companies to provide consumers with transparent access to their financial information.
If your score isn’t at the level you think it should be, there may be errors or inaccuracies that are dragging down your good name. Look for accounts you don’t recognize or balances that are not up-to-date. You may even catch an identity thief red-handed! The report comes with instructions for challenging any item. In most cases, you can leave a note for lenders in the file explaining the item under dispute. 
Boost your credit score! 
There are no simple tricks to bump your credit score in advance of a mortgage. You need to develop a 6- to 12-month plan to boost your credit score before getting your mortgage by making sound financial decisions. Demonstrate to lenders that you can use credit responsibly, and your score will increase.
One of the biggest drags on a credit score is percentage of utilized debt. If you’re carrying a balance on credit cards, this tells lenders that you may be using credit to pay for your day-to-day expenses, and that lending you more money would not be a smart move for them. Getting balances to zero should be goal number one!
Also, take care that you don’t make any major purchases using credit right before you attempt to qualify for a mortgage. Even if you’re expecting a major windfall, such as an overtime check or a tax refund, creditors don’t see that on your report. Hold off until you have the cash in hand before you splurge on a new TV or car!
If it’s a lack of credit history that’s hurting your score, many lenders offer “credit builder” loans. These involve borrowing a small amount of money and making regular installment payments on it. Parents can frequently take out these loans on behalf of children to help them build a stronger credit history. 
What else? 
If your credit score is low, and there’s nothing you can do about it, you may need to take other steps to get a better position on a loan. You might try boosting your down payment or shopping for less expensive houses, so you’re borrowing a smaller sum of money. A co-signer, another responsible party willing to take on the risk of the loan, can also improve your terms. If your debt is a serious problem, perhaps moving into a new house isn’t a good short-term priority. Focus instead on paying off debt and saving up for a down payment. This can keep you from getting stuck with a house payment you can’t afford before you’re ready for it.
Destinations Credit Union offers its members free, unlimited financial counseling through our partnership with Accel Financial Services.  Take advantage of this great resource to help boost your credit score. 
SOURCES:

http://www.investopedia.com/terms/p/prime-credit.asp

http://www.gobankingrates.com/personal-finance/7-ways-to-boost-your-credit-score-this-month/

http://hubpages.com/money/Tips-To-Increase-Your-Credit-Score

Mortgage Pre-qualification

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Q: Every ad for mortgage companies I read talks about pre-qualification or pre-approval. Is that something I need to do before I start house shopping?

A: There are two phases to securing a mortgage.

Imagine the lending market as sort of trying to set up a friend on a date. You tell your friend about the partner you have in mind for them, and based on what you tell them, they decide if that person is worth a date. They’re considering the possibility of the date, assuming everything you say is true. If you tell your friend about the potential date’s persistent body odor problem, they might choose to say no. If you tell your friend about their beau-to-be’s interesting job, sense of humor or winning smile, they’d probably set up a date to see for themselves. That’s part 1.

Of course, your friend doesn’t go immediately from your description to wedding bells. First, they have to actually date and get to know each other. Your friend has to see if the qualities you described are actually true and make sure there’s nothing hiding beneath the surface that would rule them out. That’s part 2.

While it does make for some confusion, lenders may refer to either part 1 or part 2 as pre-approval, and the other as pre-qualification. Rather than focusing on the labels, focus on the steps involved and what the steps mean. We’ll keep calling them “part 1” and “part 2.”

What do I need for part 1?

In part 1 of the process, you describe your financial situation to a potential lender. Usually, this information includes salary, savings and current debts. The lender may or may not pull your credit score at this point. Based upon that information, the lender will make a determination about the kind of loan you might qualify for, assuming everything you’ve said is true.

You don’t need to prove anything at this point. It can be done over the phone, over the Internet or in person and no documentation is required.

During Part 1, you might want to compare possible mortgage rates. There’s a lot less paperwork involved, so it’s much easier to ask a lender to run through a variety of scenarios. You can look for a loan situation that combines the monthly payment, interest rate, term and down payment where you have the most comfort.

Part 1 can be completed early in the house shopping process. In fact, it makes sense to do this before you view the first house. That way, you won’t fall in love with a house you can’t possibly afford or convince yourself to settle for a house that doesn’t really meet your needs. This also gives you the chance to straighten out any potential kinks in your financial situation before starting part 2. Don’t worry about multiple checks on your credit if necessary. Credit bureaus lump mortgage inquiries within 30 days together as 1 inquiry, so they won’t adversely affect your credit score.

It’s important to note that pre-qualification is not a guarantee of a loan. To continue our example from above, your friend agreeing to a first date does not mean you get to start planning a wedding! Completing part 1 is a way to get an idea of how much you can afford to spend during your house hunting, as well as a way to show potential sellers that you’re serious. Completing part 1 illustrates to a buyer that you are already part of the way through the lending process, and it’s less likely that your financing will fall through.

What do I need for part 2?

Part 2 is where the paperwork starts to fly. At this point, a lender is deciding whether or not to issue you a loan. Successfully completing part 2 means a lender is ready and willing to provide you with a loan up to a specified amount.

To navigate this step, you’ll need to prove everything you claimed in part 1. This means you need to provide tax forms to substantiate your income and account statements to verify your savings. You’ll also need to sign a variety of forms giving your lender or their agents the power to talk to employers, landlords and the IRS about your financial security.

Generally, lenders will want tax returns for the past 2 years, including supporting documents like W-2 forms. If you’ve switched jobs a few times in that span, you may need to go further back to demonstrate consistent employment. If you’re an independent contractor or own a small business, documentation requirements are significantly steeper. You’ll need to provide enough financial disclosure to show lenders that you can make the payments.

Completion of part 2 is a conditional approval for a loan. If the house you’re buying passes appraisal, you will get financing on the terms you’ve agreed upon with your lender. The paperwork is a bit more cumbersome, so you don’t want to do this multiple times. Only complete this step with a lender you’re going to borrow from.

Part 2 is best to complete before you make an offer, especially in competitive markets. A letter of prequalification or preapproval that shows your financing is in place does a lot to reassure sellers that your offer will survive until closing. If you’re on the fence about what house you’ll put an offer on, this process can still be completed with the property identified as “to be determined”.

Don’t worry if this process seems confusing. You’ll be working with a qualified mortgage professional who deals with it every day and can answer all your questions. One of the benefits of working with Destinations Credit Union, an institution you trust, for your mortgage is that it clears your mind to focus on the important stuff, like where to put the sofa!

SOURCES:
http://www.consumerfinance.gov/askcfpb/127/Whats-the-difference-between-a-prequalification-letter-and-a-preapproval-letter.html  
http://www.myfico.com/crediteducation/creditchecks/inquiries.aspx  
http://www.zillow.com/mortgage-learning/pre-approval/  
http://www.investopedia.com/terms/p/preapproval.asp  
http://www.investopedia.com/articles/basics/07/prequalified-approved.asp 

Pay For Delete Scams

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You may already be checking your credit report regularly and you might have developed the habit of challenging or reporting any suspicious activity. But what do you do with a stubborn charge that won’t go away? You know you shouldn’t have to pay it, but for whatever reason, you can’t get it off your report.  You call the creditors in question and they tell you they understand, it’s no big deal and they’ll gladly delete it from your credit report if you pay a small fraction of the charge.  What do you do in that scenario?

For a lot of people, paying a couple hundred dollars is better than the headache or the full amount of the charge. They don’t have to worry about the charge, and they know that over time they’ll more than make up that money in savings on credit card interest charges.  It’s all part of the cost of doing business, they think, so they cut a relatively small check.

For the rest of us, we don’t want injustice to stand.  Or maybe we can think of a better way to spend a few hundred dollars than paying a scammer.  We could put it toward retirement, our kids’ college funds, or buy ourselves a new dress for stepping out on the town. The point is that spending a few hundred dollars on a personal luxury, no matter how frivolous, is still a better idea than spending it on a scam.

Legitimate credit agencies don’t engage in pay for delete schemes. The way it’s supposed to work is that if a debt is reported as being sent to collection, it stays on your credit report for seven years, with certain exceptions, including some medical bills. Often, big credit agencies will sell the debt to smaller ones for less than what is owed, so they can receive guaranteed income, then the smaller agencies are looking to get some amount paid off, generally more than they paid for the debt.

Those smaller agencies are often less scrupulous, and they offer to report the whole debt as a mistake if you pay a certain amount. Sometimes, that amount is the debt in full, which nets them a tidy profit. Other times, it’s a smaller amount.  In theory, this could have a very positive effect on your credit.

However, there’s no guarantee they’ll follow through, nor a reason for them to put the offer in writing, because the process isn’t above board. In addition, if a creditor creates a charge that shouldn’t be there, they’ll often ask for pay-for-delete so they can mark it as removed, making it harder to identify a fraudulent charge after the fact.

Arm yourself with knowledge. Here are three scenarios in which a charge can be removed from your credit report:

  1. You never got the bill (or the bill was for an incorrect amount)– This is pretty obvious, and you shouldn’t have to pay a dime.  Make sure to challenge suspicious charges. If you don’t believe that you incurred a debt, let the collection agencies know. Ask to see evidence of the bill; sometimes the creditor can’t produce it, and they will waive the charge. Make sure to follow up afterward to confirm that the charge was removed.
  2. The bill was for a medical debt – As mentioned earlier, some forms of medical debt can be removed from your record. Double check this with your accountant or lawyer. Make sure you also check with your insurance company so you know they paid as much as they were obligated. Ask the medical provider for a detailed, itemized bill, then ask your insurance company for your explanation of benefits (EOB). At a minimum, show the EOB to your medical provider to make sure they’re billing correctly. Every case is different, so be detail-oriented, write down everything the provider and insurer tell you, and seek help from a professional. A single medical bill can be worth 25 points on your FICO score, so it pays to follow through. Remember, a creditor is not a medical provider, so they will have much less freedom to rework old bills, which is why they may be more interested in pay-for-delete. 
  3. It’s a small-time creditor – This is where the line between good security and under-the-table scam starts to blur. Small-time creditors want the revenue and they’re going to be more likely to offer shady practices in exchange for money. Make sure to get everything you can in writing, and be suspicious. If they’re unscrupulous enough to try pay-for-delete, then they probably didn’t do all of their due diligence to find out if you paid the bill. Ask for evidence. Make sure you really owe the money. Be persistent; this is real money that you can spend in better ways than on scams.

It’s important to stay on top of your credit report, but don’t let that number at the top dictate your life. Yes, you’d like it as high as possible, but that’s not a reason to give money to scammers.  If you do the work on your end, you can often get to the bottom of these charges, save your credit score, and keep cash in your pocket.


Sources:
https://www.credit.com/credit-reports/the-truth-about-credit-repair/ 
http://www.creditcards.com/credit-card-news/pay-for-delete-shady-credit-report-cleanup-1264.php 

http://www.creditinfocenter.com/debt/pay-for-delete.shtml

Prep Your Finances for Success in 2016

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Brought to you by our partner Accel Financial Services
With 2016 just around the corner, many people will make resolutions to manage their personal finances better.  Whether that means saving more, or setting up a personal budget, the suggestions can get overwhelming.
Here are four easy personal finance goals for you to consider, to start the New Year on the right path:
1. Set up a money management system that works for you

Different systems work well for different folks, but here are a few ideas:

  • Write down your income and all of your monthly expenses. Look for opportunities to trim expenses, wherever you can.
  • Identify the areas where you might overspend, and then decide to use cash for these transactions. Then, limit the amount of cash you put in your wallet each week to the amount you’ve decided to spend. Seeing the amount of money available as a fixed, finite thing can help you control your spending. 
  • Set up automated budget alerts with a service such as our MoneyDesktop financial management program within online banking.

2. Review your credit report 
Visit www.annualcreditreport.com to receive one free credit report annually from each credit bureau. 

If you’re having trouble understanding how to improve your credit, a free credit report review through the Accel program can help.
3. Begin to save 
Once you’ve got a workable budget, automate the process of saving. Setting up direct-deposit into savings makes it much more likely that you’ll save. Plus, paying yourself first helps the money to be “out of sight and out of mind,” so that you’ll be able to stick more closely to the spending plan you’ve set for yourself.
It’s important to reach a point where you have a balance between short-term savings and long-term (retirement) savings. It should be a priority to try to adjust your budget, so that you can take advantage of any employer-sponsored retirement plan that your job might offer, especially if the employer offers a contribution match.
4. Get serious about reducing debt 
One of the first steps in decreasing your debt load is to stop adding to it in the first place. Begin to get out of the habit of using credit cards for purchases.
If you have consumer debts, look for ways to try to reduce your overall interest costs and fees. Through our credit union’s partnership with Accel, you have access to a Debt Management Plan, which may reduce interest rates, lower monthly payments and waive late fees, for free!  To learn more, call 877-332-2235 or visit www.accelservices.org.

Is It Time To Upsize Your Home?

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Life rarely turns out the way we plan, and when a surprise comes along, it’s usually not an opportunity to simplify our lives.  If you’re one of the many parents blessed with one more angel than you had planned for, you understand just how such surprises can make the simplest things much more complicated. Or maybe the innocent angel you’ve been raising has entered adolescence and wants some space alone.  Or maybe it’s gone the other way for you:  You bought a house when prices were low and wages were tight, and now that you have some equity and a higher income you’d like to bump up your standard of living.

If any of those scenarios sound familiar, it might be time to upsize your home. But is expanding right for you? 

Upsizing is great … 
You probably don’t need anyone to tell you that a bigger house in a nicer neighborhood would be fantastic.  If you could get the kids out from under your feet, you could go back to reading that book you never finished or start that workout regimen you’ve been putting off, or whatever it is that makes you want to plunk down your hard-earned money for a new home.
But there are really strong arguments to be made for upsizing that might not be as obvious.  For example, you may not actually want more square footage.  One way to upsize without getting a giant house full of rooms you might not need is to look into adding outdoors space.  Some homes have gorgeous patios, outdoor kitchens and even wood-burning outdoor pizza ovens!
Another alternative to upsizing your space is to move into the home of the future.  That Cape Cod or Queen Anne you’re in right now might be beautiful, but is it built for the 21st century?  Are the speakers built into the walls?  Is it set up for home automation?  Or does it have that one bizarre room with no outlets, like some mid-century houses in the Midwest?  For some people, particularly those with a home business, it can even be worth paying more every month if doing so moves you to a neighborhood with faster Internet.
Baby Boomers have been upsizing their homes at a surprising rate, often moving into larger homes for retirement.  Usually, people move into larger homes because they want the space and retirees presumably have an empty nest.  Moreover, as we get older, it can be harder to lug a vacuum up the stairs or commit to mowing an enormous lawn every weekend.  But Boomers have learned the value of luring others over, often choosing houses on artificial lakes or in gated communities with kid-friendly amenities.  Suddenly, the big house is a blessing, because there’s room for everyone at Thanksgiving!  If you’re wanting to cut down on your travel time or increase your hosting duties at social events, a bigger house might be just the ticket. 
… But maybe not? 
You’ve been through this before, when you bought your current place. Buying a home is a little tedious and a lot expensive.  As you’re looking back on it, you might wonder why you’d ever go through that process again when it might be easier just to ask one of the kids to sleep in a tent out back or put up guests in a nearby hotel.
The good news is that it’s not going to be that difficult this time.  You know what you’re doing and you should have fewer surprises.  You’ve got the down payment set up through the equity in your current home.  And if you’re already financing through [credit union], a new loan approval will be fairly quick and easy. 
What about right now? 
If you’re considering the idea of upsizing your home, now’s the time for action. The dollar is gaining steam and plenty of economists are predicting we’re likely to see interest rates go up at some point this fall.  If you can get in before then, you’ll save some real cash in the long run.
It’s also a good idea to act now because you can catch both sides of the housing recovery.  If your home has regained its value, but you know a neighborhood that hasn’t gotten back to full value yet, you can make a shrewd investment to get a bigger, nicer house in the other neighborhood and wait until that new home gets to the value it should have been selling at all along.  Right now, you’ve got a great buy low, sell high opportunity.
If you’re ready, or you think you might be ready to think about being ready to upsize your home, give Destinations Credit Union a call.  Rates are still fairly low.  If you don’t know if you can afford to upsize, give us a call anyway.  Our home loan specialists can help you figure out if upsizing is the way to go, help you build a budget, or show you our construction and remodeling loans if you’re looking to upgrade your new home before you move in.

A New Kind of Grandparent Scam

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For years, con artists have preyed on the elderly, claiming to be their grandchildren and in trouble with desperate need for money.  This is the traditional grandparent scam and it dates back to as long as grandparents have had home phones.  Scammers know that grandma will do anything to help out, and they also know members of “the greatest generation” are excellent marks for phone scams.  In the traditional version of this scam, someone calls and tells the grandparent their grandchild has been jailed for a minor offense in a foreign country or has had a medical emergency befall them. Of course, other situations that would present an immediate need but be very hard to quickly verify are also used, so there is no one sure tell based upon circumstance. 

In reality, the grandchild is not under arrest, in the hospital or in trouble at all. At the very moment the scammer says the grandchild is in the middle of an emergency, he or she is probably just staring at a cellphone screen, possibly while they’re in class, oblivious to the whole situation.
A new version of the scam has been making the rounds this summer and it has a 21st century hook. The FTC, the BBB and various news organizations are reporting that scammers are now claiming to be debt collectors and getting older Americans to fork over credit card information or wire money to the scammers.  Sometimes the collectors claim to be after young people, threatening that if grandma doesn’t come through with the cash, the grandchild will be arrested, have their license revoked or lose their job. Other times, the scammers claim the grandparents are on the hook for the debt and use their fear of losing their credit rating to finagle some easy money out of a frightened victim.
The debt collection angle is new to the grandmother scam, but hardly a new scam in itself.  Con artists have been calling with fraudulent debts and fabricated threats for years, often claiming a long-forgotten payday loan or other non-traditional debt has been turned over to the police. But as people have gotten wise to phony debt collection scams, they’ve combined the routine with grandparent scams to make a new scenario that feels very real.With student loans and credit card debt through the roof, it’s easy to believe a loved one could have all sorts of debt we don’t know about. With the pressure on, it’s difficult to find out if it’s true.  But, if you didn’t co-sign a loan, you can’t be held responsible for paying it, no matter what someone tells you over the phone.  In fact, it’s illegal for a debt collector to tell you if someone else has a debt at all. If you’ve ever called a credit card company on behalf of your spouse, you’ve probably experienced the privacy laws in action, because the credit card company won’t even talk to you.   

If you feel pressured to make a payment or provide personal information over the phone, try to get off the line as quickly as possible.  Offer to call them back, if necessary.  The more they try to keep you on the phone, the more likely it is that they’re fraudsters who are after a quick buck.  If you think you might be a potential victim of such a scam, let the FTC know immediately, at www.ftccomplaintassistant.gov/. 
Then, let Destinations Credit Union know so we can make sure your accounts are safe, issue new information if necessary, and prevent any fraudulent charges.  We can also show you how to go through your credit report and find out if you have any debts you don’t know about. 
When someone pressures you on the phone, it’s always a good idea to take a break and figure out what’s really going on.  

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The Effects of China’s Market Crash On Typical Americans Like You

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Predicting the future of international finance can be a fool’s errand. Fluctuations in a small aspect of a small market can ripple in untold ways, changing the environment all the time, like the proverbial butterfly responsible for all of those hurricanes.

Unfortunately, shrugging in the face of the unknown is really uncomfortable when it comes to finances. When we need to know how it will affect us, we go to financial advisors.

What about when we don’t have any specific investments in either area?  How might it affect us then?  Below are some of the people likely to be affected by the economic news of China’s struggles last week.  Some it will hurt, some it will help and some we’ll have to wait and see. 

You might be hurt if:
Your portfolio is heavy on retail brands.  In the last decade or so, American demand for retail goods slowed at the same time Chinese demand grew, so many of our corporations recorded sales growth that was largely or exclusively based on Chinese consumers.  Yum! Brands, Intel, McDonald’s and Starbucks all rely on Chinese consumers for between 15 and 20 percent of their revenue, and the Chinese middle class just got hit with back-to-back market crashes.  We won’t really know which companies were hit the worst until sales figures and quarterly reports start coming out, but you should identify which stocks you own that are heavily invested in China and see what they plan to do to keep afloat.
 Your income is directly related to manufacturing.  Banks around the world are stockpiling dollars because American currency seems much safer than a Euro that’s dealing with a crisis in Greece or any Asian currency that is inextricably tied to China.  As a result, the dollar has increased in value about 3% in the past month.
That sounds great, but a strong dollar makes exporting more difficult and makes imports cheaper, both of which make it harder for American manufacturing firms to compete with overseas factories. The Obama administration, like the Bush administration before it, has repeatedly pushed China to strengthen its currency for this reason, but has little to show for it.  Some financial analysts suggested the Asian free trade agreement signed last month was meant to prevent exactly this kind of situation: Chinese market insecurities resulting in problems for American manufacturing.
You might be helped if:
You own a business.  Whether your company is big or small, a strong dollar gives you a leg up right now.  Obviously, you can order stock from overseas, knowing it will cost less and pocket the profit.  It might be time to think bigger, though.  If your dollar is worth 3% more than it was a month ago, that means any loan you take out will come at a discount.  If you wanted to buy a $10,000 piece of equipment from China but scoffed at the interest rate, you can cut it considerably right now. 
You own a home.  It may not be obvious at first, but everything in your home goes through China. Your car had parts manufactured or assembled there, your clothes, your furniture … everything. You’ll feel the effects of Chinese firms trying to get sales every time you go to the store and possibly until Black Friday.

But you could also get a great deal on home fixtures and appliances very soon. Chinese factories need the cash, and with their domestic housing bubble bursting, you’re the only one left to buy that amazing new washer/dryer.  What if you moved up your remodel to this fall?  You could be looking at glorious home goods at ridiculous prices.

Talk to Destinations Credit Union about automobile and personal loans. Get one of the lowest loan rates in the Baltimore area in addition to the cheaper cost of the goods you want to buy.  Let’s see if we can help you capitalize on this opportunity. 


Sources:

http://www.theguardian.com/us-news/2015/jun/24/barack-obama-fast-track-trade-deal-tpp-senate

Credit Repair Scams Are Back, Don’t Let Them Fool You

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Earlier this month, the Better Business Bureau warned the country to keep an eye out for criminals masquerading as credit repair agencies, an old scam that keeps coming back every few years.  The scam is easy to spot if you know what to look for, so here’s what you need to know. 

How the scam works:

Companies advertise a service that can give customers a “new credit identity” and will immediately fix their credit score.  The scammers charge their customers an upfront fee in exchange for a 9-digit code, sometimes called a “Credit Profile Number” or “Credit Privacy Number.” They might say the number protects customers from identity theft, builds their credit or enrolls them into a new government debt-relief program.

The numbers they give to customers are not magic numbers that fix bad credit; they’re stolen Social Security numbers.  Not only won’t they improve your credit, but anyone who pays a scammer has unwittingly bankrolled an identity thief. 

How the scam can hurt you:

If a company sells you a stolen Social Security number and you use it to apply for a loan, you’ve committed fraud, even if you had no idea that the number was stolen.  If you lie on a credit or loan application, misrepresent your Social Security number or obtain an EIN under false pretenses, you’ve committed a federal crime.  You could face fines, or in some cases, time in prison.  If you suspect this might have happened to you, seek legal advice immediately. 

How to spot a scam:

Credit reporting scams are one of the many kinds of criminal activities built around identity theft. If you’re not sure if you’re dealing with a criminal, listen for some of these key phrases credit repair scammers use:

·        “We just need a small fee to get started”  – In the U.S. and Canada, credit repair companies can only receive their fee AFTER they’ve performed a service.

·        “We dispute all of the charges on your credit report, even the ones that are correct.  The worst thing that can happen is that they say ‘NO’ and you might even get lucky” – Legitimate credit companies will not encourage you to lie to credit agencies because that’s a crime.  It is a good idea for you to check your credit report for inaccuracies from time to time, but don’t lie to those agencies.

·        “If a loan asks for your Social Security number, put in this code instead” – There is no magical code to fix your credit.  If it seems too easy, proceed with caution.

Remember, some credit repair companies work hard and treat their customers fairly.  They’ll write a contract, make their loan rates known and follow the law.  When you call an honest company, you’ll know the rates and terms.  Scammers tend to make outlandish promises or omit details, so if a deal seems too good to be true, or if it’s hard to find out what you’re getting into, you might want to walk away. 

What to do if you think you might be a victim:

If you’ve been the victim of this kind of scam, you have some legal options.  You can sue them for any money you lost, seek punitive damages on top of that or join a class action suit.  Talk to a lawyer immediately.

You can also file a complaint online atftc.gov/complaint 

Who can I trust to repair my credit?

If you have bad credit, it can feel like everyone is trying to scam you.  If you need to repair your credit, and you don’t know who to trust, talk to Destinations Credit Union‘s counseling partner Accel.  Accel can help you make a plan to get out from under your debt, build your credit successfully, and plan for the future.

If you don’t have any credit, then Destinations Credit Union can help you, too. Unlike the multinational corporate banks and credit cards, we’re local and personal.  You’re more than a number to us, and we look forward to helping you.

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