Improving Your Credit Score

This is the second article in a two-part series about credit score information.  Our [previous post] showed you what information is included in a credit score.

 

Now that you know a little more about what goes into your credit score you may be wondering what you can do to improve it. Here are a few simple tips:

 

Pay Your Bills!

First, and foremost, pay your bills ON TIME, EVERY TIME. You can pay them a few days early to make sure they process on time. Being even one or two days late affects your score the same as being 30 days late. Over 30 days late? You are hurting your score even more.

 

If you can afford it try and make more than the minimum monthly payment on your credit cards. It will save you money, in the long run, because you end up paying less interest. It will also show lenders that you take your debt seriously and work hard to repay it.

 

Close Unused Accounts

Close unused accounts. If you have paid off a loan or a high interest credit card and you no longer intend to use it, close it. You do not want to close every line of credit offered to you because another thing credit bureaus look at is your used credit versus your available credit. Bottom line: If it is a card with a high rate then have it closed.

 

Get a Free Credit Report

You can always get a free copy of your credit report once a year from all three major credit bureaus. It’s simple to call and request your report. Then you know what lenders are looking at when they evaluate you as a borrower. Looking at your free credit report can also help you determine where you can improve.

 

To request a free credit report, visit http://www.annualcreditreport.com

C.S.A.S. Training

The Topeka branches hosted “Central Secret Agent Savers Training” on Saturday at the downtown bank location. The bank partnered with Big Brothers Big Sisters to plan the event, and the day was a great success. “We had eight kids attend,” said manager, Candis Meerpohl. “I think our turnout was definitely affected by graduation, but we are eager to do it again in six months.” The kids started the day with juice and doughnuts, and then went on a bank tour. After the tour, it was explained that the kids needed to complete three missions to become agents:

Mission #1 Make their alias. They picked their secret agent names and made masks to hide their identity from Mr. Splurge.

Mission #2 Learn about saving money! This was a classroom-type event where we explained that when we get little bits of money we can save it and end up with a large amount of money. We also explained earning interest on money and making savings goals.

Mission#3 Human Board Game This mission was designed so that the kids could use what they learned in their class and put it to use. The kids were the board game pieces and picked clues that said either a good money decision or a bad money decision to try and get around the board.

 “I’m happy to say we graduated all eight agents that came!” said Meerpohl. All of the kids had a great day, and a BBBS representative who attended was very impressed with the program and the account.

First-Time Home Buyer Tax Credit

If you have been on the fence about buying a house, like me, the government is offering some incentive to get out and buy.  If you are a first-time home buyer and purchase a home anytime in 2009 before the end of November, you may be eligible for an $8,000 tax credit!  A first-time home buyer is defined as someone who has not owned a home during the past three years. The best thing about this program is that it is a CREDIT–you don’t have to pay it back!
 
There are plenty of ways you can put the credit to use. While you don’t get the credit right away to use as part of your down-payment, you can save it and use to help pay your monthly mortgage.  This can help if you want to buy a home that is priced a little higher than you want to spend. 
 
You can use the eight thousand to buy new furniture and appliances for your home.  I’ve been using the same hand-me-down items for the last several years and am looking forward to having something nice for my new home.  Who knows, I may even use a little of the credit on a fun vacation and do my part to help stimulate the economy.
 
For more information on the First-Time Home Buyer Tax Credit go to

Jury Duty Scam

This has been verified by the FBI (their link is also included below). Please pass this on to everyone in your email address book. It is spreading fast so be prepared should you get this call. Most of us take those summonses for jury duty seriously, but enough people skip out on their civic duty, that a new and ominous kind of fraud has surfaced.

Jury Duty Scam

The caller claims to be a jury coordinator. If you protest that you never received a summons for jury duty, the scammer asks you for your Social Security number and date of birth so h e or she can verify the information and cancel the arrest warrant. Give out any of this information and bingo; your identity was just stolen.

The fraud has been reported so far in 11 states, including Oklahoma, Illinois, and Colorado.
This (swindle) is particularly insidious because they use intimidation over the phone to try to bully
people into giving information by pretending they are with the court system. The FBI and the federal court system have issued nationwide alerts on their web sites, warning consumers about the fraud.

Check it out here: http://www.fbi.gov/page2/june06/jury_scams060206.htm

And here:
http://www.snopes.com/crime/fraud/juryduty.asp

Internet Crime Complaint Center

 

The Internet Crime Complaint Center (IC3) is a partnership between the FBI, The National White Collar Crime Center and the Bureau of Justice Assistance.

IC3’s mission is to serve a vehicle to receive, develop and refer criminal complaints regarding cyber crime.  The IC3 gives victims of cyber crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations.  IC3 provides a central referral mechanism for complaints involving Internet related crimes to law enforcement and regulatory agencies. 

IC3 accepts online Internet crime complaints from either the person who believes they were defrauded or from a third party to the complainant.  If you believe that you are a victim of cyber crime, go to www.ic3.gov to file a complaint.  Information needed to file a complaint includes the following:

  • Name
  • Mailing address
  • Telephone number
  • The name, address, telephone number, and Web address, if available, of the individual or organization you believe defrauded you
  • Specific details on how, why, and when you believe you were defrauded
  • Any other relevant information you believe is necessary to support your complaint.

This site also contains valuable information about current Internet scams and how to prevent falling victim to such scams.

Tis the Season…of Scams

The Holiday Season seems to bring out the best and worst of human nature.  On the worst side are the scams that are designed to cheat honest people out of their money.  As we get closer to Christmas and as the economy worsens, it is important that we all be aware that scammers are keeping busy. 

Some of the more common scams that we see include:

  1. Lottery Scam: This is one of the most popular counterfeit check scams because it is successful. The victim will receive a letter or e-mail informing them that they have won a lottery or sweepstakes.  They are given a counterfeit check to finance the taxes and fees associated with collecting the prize.  They are asked to cash or deposit the check and wire the money to an individual who is collecting the “tax”.  It is difficult to detect this scam because the checks are usually lower dollar amounts (less than $3,000) and technology makes it easy to counterfeit real bank checks.  The victims are also told not to disclose their good fortune until they collect their grand prize. The reason this is so successful is that it plays on an American dream. If you receive one of these letters and checks, ask someone at your bank before you fall victim.
  2. Internet Auction Scam: In this scam, the victim places an item for sale on the Internet (not necessarily on e-bay, often on local classified websites). The winning bidder contacts them to arrange payment, but there is a catch. The buyer is overseas and shipping needs to be arranged. Payment is sent in the form of a counterfeit check for thousands of dollars in excess of the purchase price. The buyer is asked to wire the excess money to the buyer’s shipper who will arrange pickup of the item (they are often told that there is a little extra money for them to keep for their trouble to sweeten the deal). The money is wired before the check comes back, leaving the victim out the money.
  3. Internet Auction Scam 2: In this scam, the victim receives counterfeit money orders for their items.  In most cases, the item is sent before the counterfeit is detected and the victim is out the money and they item that they were selling.  Most money orders have instructions for validating their authenticity.  For example, some have a circle on each of the money orders that will change colors if you rub it, or they have a telephone number to call.  Postal money orders can be verified by calling 1-866-459-7822.

These scams are always evolving and we see new twists all of the time.  Education is the best form of scam prevention. Just remember if it seems too good to be true it probably is. Have a safe and happy holiday season.

FDIC Insurance Limits

As part of the FDIC’s temporary liquidity guarantee program, participating institutions get full FDIC coverage for non-interest bearing transaction deposit accounts, regardless of dollar amount, until December 31, 2009. For purposes of the rule, the FDIC’s definition of a non-interest bearing transaction account is a traditional checking account that allows for an unlimited number of deposits and withdrawals at any time, and pays no interest.

Central National Bank is participating in this program, so our customers get full FDIC coverage on every dollar in their non-interest bearing checking accounts, regardless of the account balance. Business accounts and personal accounts qualify for the unlimited coverage, as long as they are transaction accounts that do not earn interest.

To clarify: all of our bank deposit account types are FDIC insured up to the $250,000 limit per depositor. The unlimited coverage is only offered on our non-interest bearing transaction accounts.

 

FDIC’s Press Release: http://www.fdic.gov/news/news/press/2008/pr08105.html

Save Now, Get Rewarded Later

I recently told my friend about a great auto rate at CNB. He bought a Prius a year ago and has a loan with a 7.5% interest rate. I crunched some numbers to show him what his payments would be and the amount of money he’d save in interest if he was approved to be refinanced at 4.74% APY*.

Over a five year period, he would save almost $2,000. No brainer, right? He ended up passing on it.

You see, he lives out of state and to get the deal he had to agree to open a checking account and have the payments automatically deducted. He thought it would be too difficult to have a checking account out of state. I told him he could use his current bank’s online bill pay and send the payment amount to his checking account each month, but he still thought it too troublesome.

When you look at his savings in the long run and what that 2K could do in a Roth IRA, look at the possible returns:

  • Roth IRA in 10 years at 5%…$3,257 at 8%…$4,317
  • Roth IRA in 20 years at 5%…$5,306 at 8%…$9,322

My friend falls into the way numerous members of Generation Y behave financially. Many of us don’t like to think about how much we could have in the future if we looked into ways we could save today.

Instant gratification surrounds us everywhere we go; 0% down, no monthly payments for a year, no interest for three years. All of these deals are thrown at us and we feel like they are too good to pass up. Look at some of these statements members of Gen Y make when it comes to saving:

  • “I can’t socialize and save.”
  • “Why save when you can reverse save?” Reverse saving: spend today, pay tomorrow
  • “When I settle down, I’ll save.” Saving is for older and married people
  • “I love spending money; what else am I going to do with it?”
  • “I just know something great is going to happen to me.”
  • “Banks only care about people with money.”

The skewed view that you can spend now and worry about your nest egg later is one reason all generations are contributing to a negative savings rate. It’s also the reason it is going to get harder and harder for people to truly retire. Do your future self a favor and talk to someone about the benefits of putting money away, and refinancing high interest debt.

The early bird gets the worm, and the early saver gets to enjoy the golden years w/o having to have a part time job!

* Annual percentage rate quoted above available for loan amounts $30,000 or greater for borrowers who meet credit qualifications. APR will be adjusted for different loan amounts. Loan fees and certain restrictions may apply. Auto loans subject to qualifications. Member FDIC.

Improving Your Credit Score

This is the second article in a two-part series about credit score information. Our previous post showed you what information is included in a credit score.

Now that you know a little more of what goes into your credit score you may wonder what you can do to improve it. Here are a few simple tips:

Pay Your Bills!

The first and foremost thing is to pay your bills ON TIME, EVERY TIME. Pay them a little early to make sure they process on time. Being even one or two days late affects your score the same as being 30 days late. Once you are over 30 days late you are hurting your score even more.

If you can afford it, try and make more than the minimum monthly payment on your credit cards. It will save you money in the long run because you will pay less interest, and it will show lenders that you take your debt seriously and work hard to repay it.

Close Unused Accounts

Close unused accounts. If you have paid off a loan or a high interest credit card and you no longer intend to use it, close it. You do not want to close every line of credit offered to you as another thing credit bureaus look at is your used credit versus your available credit but if it is a card with a high rate have it closed.

Get a Free Credit Report

You can always get a free copy of your credit report every year from all three bureaus. Simply call and request your report so you know what lenders are looking at when they evaluate you as a borrower. Looking at your free credit report can also help you evaluate where you can improve.

To request a free credit report, visit http://www.annualcreditreport.com.

What’s the Deal with Credit?

This is the first article in a two-part series about credit score information.

When applying for a loan or a credit card it can seem kind of strange where that three digit credit score comes from? What are these strangers looking at that decides if you get a loan or not.

So what is a credit score? It is in essence your grade on how you have handled credit or debt in the past. It is not a random figure but more a formula that credit bureaus provide to lenders to help them assess the risk in giving you money.

What Information is Included in a Credit Score?

Chances are you were affecting your credit score before you even knew it. When you got your first bill all in your name with your social security number attached to it your repayment history was getting a score. Was that payment on time, was it paid in full? All these things contribute to your credit score-and more! Here are the 5 major pieces of information that comprises a credit score:

  • Payment History (35%)
  • Length of History (15%)
  • New Credit (10%)
  • Types of Credit Used (10%)
  • Debt (30%)

Something you might find strange is that your income is not figured into your credit score. Another thing to keep in mind is derogatory information can only stay on your credit report for 7 years. However, a Chapter 7 bankruptcy stays on your report for 10 years, but good information stays for life!

Where Do You Fit In?

The majority of the population have a credit score between 300 and 800 with only 13% of the population having a score higher than 800.

If your score falls into one of the categories below, here is what your credit score says about you:

  • 300-500: This score range usually means there is a pattern of late payments on bills. There might be one or more accounts that have gone to a collections agency for payment. There is usually other information on your credit report that shows you are a risk to lend money to and that is how lenders justify charging a higher interest rate or declining you new lines of credit.
  • 600-700: Means most payments have been made on time and no accounts have gone to collections. A score of this magnitude implies you are a dependable customer likely to pay the money back that you borrow.
  • 700+: A score this high shows lenders that you are financially savvy and do not take on more open credit than you can handle. People with scores this high can get credit quickly and easily with the lowest interest rates a lender can offer.

Tune in next week for information on how to improve your credit score!