What’s Your Score? What Does It Mean?

The credit industry is keeping score. Every time you apply for a credit card, a mortgage, insurance or perhaps even a job, your application is judged in part by your credit score. Ranging from 300 to around 900, the number is used by lenders to objectively measure your creditworthiness. The higher the score, the more likely you are perceived to repay credit.

There are two commonly used scores: FICO and VantageScore. FICO scores range from 300 to 850, while Vantage scores range from 501 to 990.

Factors that affect your credit score include payment history, amount of debt you carry, length of credit history, whether you frequently apply for new credit and your credit mix (credit cards, retail cards, mortgage and personal loans).

The best advice is to pay bills on time and only charge as much as you can afford to pay in full when the bill is due on credit cards and other revolving accounts.

To order your credit report for free, go to www.annualcreditreport.com. You can order one free credit report a year from each of the three credit reporting bureaus— Equifax, Experian and TransUnion.

Copyright 2011 Credit Union National Association Inc. Information subject to change without notice. All other rights reserved.

Low Financing Rates from our Annual Car, Truck, Boat & RV Sale Extended!

Thank you to everyone who came out to our Annual Car, Truck, Boat & RV Sale this past weekend in Daleville! We hope you were able to find the new vehicle you’ve been waiting for, but if you’re still searching, we have great news! 

Our low financing rates from the sale have been extended! Now, you have more time to save on your next purchase, but it’s only for a limited time. These rates are only good until May 31st. So, hurry!

You can apply online, at any branch, by phone or at one of our preferred dealerships. Don’t forget that you can also get preapproved before you start shopping so you can work your way to the best deal once you get to the dealership. 

Give us a call at 800-448-4096 or visit us at www.aacfcu.com to see our low rates or to find out more. 

Now is a great time to save! Apply today!

Avoiding Foreclosure

One of the best ways to help yourself avoid possible future foreclosure is to plan correctly when buying your home to begin with.

• Think future affordability: It is the hope of almost every consumer that the money they make now is nothing compared to the vast riches they will make in the future. Unfortunately, that’s not always what happens in reality. Layoffs, downsizing and bankrupt businesses can mean that your future income is even less than it is when you first buy your home. So when choosing the amount of home you can afford, consider the possible negative turns your future income could take.
• Pick the right size: McMansions might have been all the rage a few years ago, but those who live in them quickly learned that paying outrageous amounts to heat, cool and maintain their spacious and half unused abodes was not the best option. Choose the right size home for your family and your lifestyle needs so you waste less on unnecessary expenses and can save more toward future emergencies.
• Make your loan payment a priority: You should always pay yourself by contributing to your savings first when you get paid, but your second priority should be setting aside the necessary amount for your house payment.

Find more helpful tips like this from On Your Way, our partner that brings you what you need to know to help you reach your financial goals. Log on to On Your Way often and increase your chances of winning prizes such as a Nintendo Wii or SpaFinder gift cards.

See Us About a Debt Swap

Consumers have spent the Great Recession paying down debts. Evidence shows that savings have risen as debt has fallen, and that’s a good thing.

Still, many people continue to struggle with high debt levels. If you’re in that situation, maybe it’s time to look at your debts in a new way.

If you qualify, you’ll make better progress retiring those old debts by swapping them in for lower rate credit union loans. For example, nationally, credit union credit card rates are more than two percentage points less than other cards. For new auto loans, the rate difference averages just shy of two percentage points.

Bring your high-interest debts to one of our helpful loan officers. There’s a very good chance you’ll be able to reduce your interest rate, and that will make your payments go further and reduce your bills faster.

You can do better at your credit union. Give us a call at 800-448-4096, email us at cuinfo@aacfcu.com or visit one of our 17 branches to see how we can help!

Copyright 2011 Credit Union National Association Inc. Information subject to change without notice. All other rights reserved.

Get a Smart Start With Credit Cards

The Credit Card Accountability, Responsibility, and Disclosure Act, commonly known as the CARD Act, is meant to protect all consumers, but it especially affects young adults.

The CARD Act bans unfair:

• Rate increases. Credit card companies must provide a notice at least 45 days before any rate increases.
• Fees. Credit card companies must give consumers at least 21 days to pay their bills and must set consistent due dates.

It also requires:

• Plain sight and plain language disclosures. Credit card companies must include information on how long it will take you to pay your balance by making minimum payments and how much you must pay to pay the balance in full in 36 months. Remember, this assumes you make no new charges!
• Accountability. Companies will be held accountable for their credit card practices and rules.
• Protections for students and young people. Young adults used to need to be 18 years old to get a credit card. Now they must be 21 years old, or be older than 18 and show proof of income or have a co-signer. The CARD Act also restricts on-campus marketing efforts and giveaways from credit card companies hoping to target students.

Your wisest choice may be a credit card from Army Aviation Center Federal Credit Union. Check our website for options or call 800-448-4096 to see what we can offer you. We want to help you get off to a smart start with credit cards.

Copyright 2012 Credit Union National Association Inc. Information subject to change without notice. All other rights reserved.

Consider a Short-Term Mortgage

Mortgage rates are at a record low. If you’re thinking of applying for a new mortgage or refinancing an existing one, consider a short payoff term. You could save tens—or even hundreds—of thousands of dollars by financing for 20, 15, or 10 years instead of 30.

A shorter term mortgage means you own your home sooner, but it might also mean a higher monthly payment. Weigh how much more you would pay in the short run against how much you would save in the long run.

Before you commit to a shorter mortgage: 

• Factor in the closing costs. If you are considering refinancing an existing loan, make sure you plan to stay in the house long enough to recoup the expense of refinancing with the new savings.
• Review your other debts. Eliminate expensive debts—for example large credit card balances—before paying extra on your mortgage.
• Put retirement first. If you don’t have a retirement account, make it a priority. If you’re eligible for a 401(k) plan, contribute at least enough to earn the maximum matching funds from your employer. Think about choosing a 30-year mortgage over a 15-year loan and investing the difference in payments into a retirement account.
• Evaluate your income source. Is your job or other income source secure? If not, a longer mortgage with a lower monthly rate might interest you. The lower payment would allow you to make extra payments on the principal when you can. One extra mortgage payment a year could shorten a 30-year loan by three or four years, and save you thousands of dollars in the long run.

Contact our Mortgage Department at 800-448-4096 to prequalify for a new mortgage loan or refinance and get the best mortgage term.

Copyright 2012 Credit Union National Association Inc. Information subject to change without notice. All other rights reserved.

Boost Your Credit Score

If you’ve recently tried to refinance your mortgage, or get a new one, you—along with 25% of all mortgage loan applicants—may have found yourself being denied a loan for a home you can afford. What’s up?

Freddie Mac and Fannie Mae, the government entities that back just about every mortgage written, have tightened lending guidelines and raised the bar on credit scores, according to CNNMoney.

The average credit score to get a conventional mortgage at a low interest rate has risen from 720 in 2007 to 760 today. Add to that the fact that you can get rejected for violating even one Freddie/Fannie guideline—for example, having a total debt-to- income ratio that exceeds 45% (in 2009 the limit was 55%).

You can do something about it, and quickly. Here are three fast ways to improve your credit score:

* Lower your credit-utilization ratio. Almost one-third of your credit score is based on your credit-utilization ratio. That’s the total of your credit-card balances divided by the total of your credit-card limits. Pay down balances and use 20% or less of your available credit, and ask your creditors to increase your credit limit. Increasing your credit limit will help you keep your use to 20% or less of your available credit. Just beware of the temptation to spend more just because you can. And keep accounts open—closing unused accounts could hurt your score by instantly raising your utilization ratio.

* Correct any mistakes in your credit report. If you’ve been denied a loan, ask your lender for copies of your reports. You can also can get one free credit report from each of the three reporting bureaus—Equifax, Experian, and TransUnion— annually, from annualcreditreport.com. On the same website, you can purchase a credit score from any of the three agencies, and report any mistakes. Correcting mistakes can improve your score quickly, especially if you do it online. The credit bureaus must process disputes within 30 days, and they usually settle them even faster than that.

* Pay your bills on time. This hasn’t changed. Missed payments remain in your credit history, counting as a negative for seven years. But the new Freddie/Fannie guidelines are tighter than ever: Missing payments on credit cards, auto loans, and other debts in which the balances do not have to be paid off every month–for example, a student loan–will add 5% of your outstanding loan balance to the debt part of the debt-to-income calculation. In other words, if the outstanding balance on your student loan is $20,000, and you miss a payment, $1,000 gets added to the debt side of your debt-to-income calculation.

Give us a call and see how we can help you stay on track to paying down debt and can help lower your payments with low-interest credit cards or refinancing a high rate loan to a lower rate. Call us at 800-448-4096 or email us at cuinfo@aacfcu.com.

New article from Jason Alderman: Credit card stolen? Here’s what you do

By Visa Inc.’s Jason Alderman

Despite high-profile media attention, the odds of having your credit or debit card number stolen by crooks remains at historically low levels. That said, it’s always good to know what to do in case lightening does strike and someone fraudulently uses your card. Left unchecked, they might try to run up bills, drain your checking account or worse – steal your identity.

Here are actions to take if this happens to you:

First, contact the bank or credit union that issued your card. You’ll find a toll-free number on the back of your card, on your billing statement or at the company’s website. Close the compromised account and open a new one with a different account number. Change related passwords or PIN numbers and notify companies that have automatic payments tied to the closed account to make sure you don’t miss a payment. Also log all calls, letters and emails you have with your card issuer about the fraud – this will be helpful if you need to file a claim or police report.

Contact one of the three major credit bureaus, Equifax (888-766-0008), Experian (888-397-3742) or TransUnion (800-680-7289), and place an Initial Fraud Alert on your credit file if you suspect you have been, or are about to be, a victim of identity theft. Whichever bureau you contact will notify the other two to do the same. If you wish, you can renew these fraud alerts each quarter, free of charge. If you determine that you actually have suffered identity theft, you can also file an Extended Fraud Alert, which will stay on your reports for seven years.

Placing a fraud alert entitles you to one free credit report from each bureau. Although the alert makes it harder for someone to open new credit accounts in your name, it won’t necessarily prevent them from using existing accounts. That’s why it’s important to close compromised accounts and to carefully review your credit reports for errors, fraudulent activity or suspicious credit inquiries from an unfamiliar source. Also be aware that posting a fraud alert could delay your own ability to obtain new credit.

If you determine someone has stolen from your account or your identity has otherwise been compromised, file an identity theft report with the police. The Federal Trade Commission’s “Defend: Recover From Identity Theft” website contains step-by-step instructions for completing and filing the report with local, state and federal law-enforcement agencies (www.ftc.gov/consumer).

Also send copies of the report – by certified mail, return requested – to the credit bureaus and companies whose accounts were impacted. You can also file a complaint with the FTC, which will enter the information into a secure online database shared by thousands of civil and criminal law-enforcement authorities worldwide (https://www.ftccomplaintassistant.gov).

Most card issuers provide “zero liability” coverage for unauthorized credit and debit card use when you promptly report the loss. Rules vary, so ask your bank or credit union for its policies.

Going forward, carefully monitor your monthly credit card and bank statements for fraudulent charges. To learn other good tips for protecting your personal and account information and preventing fraud, visit:

• The National Cyber Security Alliance’s www.StaySafeOnline.org.
• The FBI’s “Be Crime Smart” page (www.fbi.gov/scams-safety/be_crime_smart). 
• Visa Inc.’s VisaSecuritySense (www.visasecuritysense.com), which contains tips on preventing fraud online, in stores and at ATMs, spotting deceptive marketing practices, and more.

Jason Alderman directs Visa’s financial education programs. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

How to Remove Credit Report Inaccuracies

What do you do when you spot an error on your credit report? Take steps to dispute it. Because of the Fair Credit Reporting Act, cleaning up your own credit report is usually quick and easy. Credit reporting agencies (often called credit bureaus) should only report accurate and current information.

Step one – Obtain your credit reports
To know exactly what is happening with your credit, check the reports from all the major credit bureaus – TransUnion, Equifax, and Experian. The information on each report may vary because not all creditors report to every bureau. You may receive a free report from each company once per year from Annual Credit Report Request Service, or you may obtain them from the bureaus directly for a fee:

• Annual Credit Report Request Service
  877-322-8228
  www.annualcreditreport.com
• Experian
  P.O. Box 2104
  Allen, TX 75013-2104
  888-397-3742
  www.experian.com
• TransUnion
  P.O. Box 390
  Springfield, PA 19064-0390
  800-916-8800
  www.transunion.com
• Equifax
  P.O. Box 105783
  Atlanta, GA 30348
  800-685-1111
  www.equifax.com

Step two – Know what can be removed
You can’t rid every negative notation from your file – credit bureaus are obligated to report all credit and debt information as long as it is correct and timely. So what can be removed?

• Wrong information. If the report lists incorrect information, such as an account you never opened, someone else’s name or a judgment for a lawsuit you were never a part of, you can have it permanently purged from your record.
• Duplicate information. While an account can sometimes show up multiple times, you may want to have your report list it just once. This can prevent lenders from believing you have more debt or credit problems than you actually do.
• Old, negative information. In most cases, negative information, even when accurate, won’t haunt you forever. Your credit report may reflect lawsuits, judgments, liens, foreclosures, a Chapter 13 bankruptcy (from the filing date), late payments, and charged-off accounts for seven years. Chapter 7 bankruptcy will be evident for ten years from the date of filing. Child support arrearage and default notations for student loans, though, can be reported until satisfied.

Step three – Dispute inaccuracies
If you do spot errors or items that should have aged off your report, it is time to take action:

• File the dispute with the bureau. You may make your dispute on the company’s website, over the phone or by mail. In all cases you’ll have to provide your personal identification and a description of what is wrong, and what the correct information is. If you have any documents that support your case (such as copies of cashed checks that confirm you paid an account), include those as well.
• Wait 30 days. After you file your dispute, the bureau has 30 days to investigate the matter, and a dispute notation will show up on your report. The creditor will have this time to verify the information, and if they can’t prove it’s accurate, the bureau will stop reporting it. When the bureau completes the investigation they will send you a written report covering what they found, and an updated copy of your credit report if it resulted in any change.

In the majority of cases, removing inaccuracies is that simple. However, if the investigation results in no change, write a letter to the creditor and explain why the information is incorrect and that you want them to report the accurate information. Include copies of supporting documents (a statement showing a zero balance, for example), if you have them. The creditor may not continue to report unproven information.

Finally, if the situation still doesn’t get resolved to your satisfaction (or if the negative information is correct but you have a good reason for why it happened), consider writing a letter of explanation to add to your report. In one hundred words or fewer, you can explain your side of a credit problem. Write the note clearly, include supportive facts, and send it to the bureaus to be attached to your report. This “100-word statement” could make a positive difference to whoever is reading the report.

Are You Ready for a House?

There is no question that the combination of low housing prices and interest rates makes a compelling case for beginning your journey into home ownership. But being able to afford a mortgage payment on your current salary is not the only consideration that should go into your home buying decision — and it’s not the only factor that determines whether or not you are ready for home ownership.

Do you have an adequate emergency fund? If something should happen and you lose your source of income, you may no longer be able to afford that home — or any of your other bills. Before you buy a house you should have an emergency fund with 6 months of income or bill money (based on your bills after house purchase) saved.

Do you have a down payment? In order to create some equity on purchase and avoid private mortgage insurance (PMI), you need to have a down payment of at least 20 percent. This down payment should not come out of your emergency fund, but should be a separate savings. Some people put 10 percent down and then get a small loan for the remaining 10 percent to fill in the gap and avoid PMI. If the interest on your small, 10 percent loan will equal less than PMI, you may want to consider this route.

Can you also afford taxes, insurance and maintenance? Affording a home isn’t just about being able to pay the mortgage based on the sale price and down payment. You must also consider insurance, property taxes and maintenance expenses as well as increased heating and cooling costs.

Do you want the responsibility? When you own a home, you must keep your lawn mowed and landscaping maintained according to city codes. You must fix the roof, pipes, and other areas of the property that could cause big problems if not repaired in a timely way. You must create a system to safeguard your home and contents. In short, you must do everything or have the disposable income to pay someone else to do it. If this doesn’t sound like something you want to do then, no matter how cheap homes are, you just might not be ready.

See this original article and more helpful tips at AACFCU’s partner, On Your Way. Log in daily to earn rewards and have a chance at winning several prizes!