SafeAmerica Credit Union

Auto Loans

• By Kevin Alvarez

Credit Scores: How Lenders Use Them

We’ve all heard of credit scores.  But what are they? How do lenders use credit scores?

Your credit score is a number based on a formula using the information in your credit report. The result is an accurate forecast of how likely you are to pay your bills.

Credit scores are widely used. If you’ve gotten a loan, a credit card, or even auto insurance, the rate you paid was directly related to your credit score. The higher the score, the better you look to lenders. People with the highest scores get the lowest interest rates.

Defining Credit Risk

Credit scores look at information that can predict your future behavior. If you have been paying your bills on time for the past 25 years, you're likely a low-risk person to lend to, In contrast, imagine you got your first credit card two years ago and have had four late payments during that time. Your balance on the card is at the credit limit. You have applied for new credit four times in the last six months. Based on these facts, you will have a lower score, and are considered a higher risk.

Most lenders in the United States use the FICO credit scoring system. This system gives weight to different parts of the credit report. Recent payment history carries more weight than applying for credit.

Credit Score

Why Lenders Use Credit Scores

Before credit scores, lenders looked directly at your credit report. A lender may have denied credit based on a biased judgement. This method was also time-consuming. Lenders used personal opinions to make a decision about an applicant that had nothing to do with their ability to repay the loan.

Today, credit scores assess risk more fairly because they are consistent and objective. Consumers also benefit. No matter who you are, your credit score reflects only your likelihood to repay debt.

Understanding Credit Scores

What are the credit score factors?

  • Your total debt
  • Types of accounts
  • How many accounts you have open
  • Number of late payments
  • Age of Accounts

Understanding these factors is key to improving your credit score. The factors help you to improve credit history to become low risk.

Credit scores can and do change. Often, a negative item on a credit report can result in a quick and sudden decrease in the score. However, improving a credit score usually takes time and patience. There is no "quick fix" for damaged credit.

Information brought to you by our partner, Greenpath Financial Wellness

GreenPath Financial Wellness

• By Kevin Alvarez

Tips For New Credit Card Holders

For those starting their college career or their professional career, keep your eye out on offers for credit cards. These life milestones are often signals to lenders that the time might be right for you to get on board as a credit card holder.

Figuring out how to manage credit cards is critical for new borrowers. We suggest to start by asking yourself the following:

  • Is using a credit card the right way to pay for the purchase? Would cash or a debit card work just as well?
  • Is it clear how interest is charged?
  • Will any credit card fees be assessed?
  • Once the charge is made on the card, is it easy to track the minimum payments and due dates?

It can be helpful for borrowers to run through these questions for each card.  Knowing due dates, minimum payments and other terms is very helpful towards using credit cards wisely.

Advice To Follow

After you ask those questions about the basics, it also pays to think ahead.

Many people who have run into challenges with credit cards have told us that the most important advice to follow is to make payments on time, keep credit card debt manageable, pay off balances and maintain low balances to avoid interest and late charges.

If people only make minimum payments and keep making purchases, their debt will quickly grow, increasing financial stress and derailing their financial future. If a person gets into the habit of making late payments or taking on more debt than they can handle, then the credit score will suffer and they will have to take additional steps to repair the damage that been done.

New borrowers are wise to understand their current financial picture, their spending habits, and the pros and cons of how access to credit will impact their specific financial situation.

Where To Start?

As those credit card offers fill up your mailbox, it can be confusing to know where to start. Credit cards are available with many options. Compare different cards based on your needs and the card terms.

For students and new borrowers interested in using credit cards wisely, it is helpful to look at the following:

  • The annual percentage rate (APR): This is how much interest you will pay if you do not pay off your balance each month. Also, for many credit cards, rates may increase after a short period of time.
  • Fees: Many cards have yearly fees. Most charge for late payments, balance transfers, cash advances, or spending over your credit limit.
  • Credit limits: Your credit limit is right for you when it is in line with what you can afford to pay back. Many people we work with find that high credit limits offer challenges when it comes to managing the balance owed.
  • Figure out how many credit cards Is the “right” amount.
  • Managing just a few credit cards can be easier than having many cards.
  • When you reach the spending limit on one card, it’s best to manage those payments before shifting your purchases to another card.
  • Planning monthly expenses and setting a budget is the best way to easily adjust your spending habits.
  • Keeping your receipts helps with keeping track of monthly activity.
  • Having a plan will help you reduce the chance of impulse buying. When you have a plan, there’s less chance you will overspend on items you don’t truly need.
  • Review the different payment options: Is it easier to pay through an app or at a website or over the phone? Usually people can set up automatic payment drafts to pay the full balance or just the minimum payment by the credit card due date.
  • Many new borrowers find that it is necessary to use credit cards to cover important expenses such as food, gasoline, and utilities. If that becomes a regular pattern, it is helpful to review your budget.

New Credit Card Users — Next Steps

Remember: Every time you use a credit card, you take on debt, and debt is borrowing money you haven’t earned yet. It is wise to always keep the focus on this fundamental truth.  Beware of high interest credit cards that can become difficult to pay back if financial circumstances change unexpectedly.

It’s all about the basics: looking at monthly expenses, looking at income and setting spending priorities as well as building up emergency savings. As a new credit card holder, these principles will be the building blocks of achieving financial success!

brought to you by GreenPath Financial Wellness

Youth Month

Save small. Dream big.

We're celebrating Youth Month all April long! Be sure to check out our blog each week or follow is on social media for a new youth financial literacy topic.

You can also check out our Youth Program to help get your child started on the path to smart money management.

Visa Platinum Reward Credit Card

• By Kevin Alvarez

Teaching Children How To Budget

Teaching children how to budget at a young age will be helpful for them later in life. When your child gets money as an allowance or as a gift, you can help get them started with simple budgeting concepts.

Start With Goals, Wants And Needs

Talk with your child about money and how to use it wisely. Talk about their goals for their money.  What do they want? What do they need? There may be short-term goals they can be purchased right away. They may have long-term goals that will require them to save over time. It is helpful for children to have a reminder of why they are saving and why they should not spend all of their money now.

Save, Share and Spend Method

“Save, Share and Spend” is a method for children where they set aside money toward each of these three things.

Save

When your child earns money, they should first set aside a portion for savings. The recommendation is to save at least 10% of earnings. This percentage can be increased for children because they have fewer expenses. Savings can be accumulated in many ways. Some use a jar, piggybank or even a joint bank account to gain interest. The savings account should be kept for emergencies (new bike tire) as well as longer-term goals (first car).

Share

Teaching children about charity at a young age is also useful. Allow them to research and contribute to a charity of their choice. Sharing is typically around 10%. Discuss options with your child to determine which cause they may enjoy helping. Also consider having them volunteer with that organization to see what they are actually helping. For example, it can be very rewarding for children to use money to purchase toys for a local outreach center. Then they can help pass out those items out to needy families at Christmas.

Spend

The remainder of their earnings can go toward spending. The spending category is available so your child can make purchases they choose, but remind them that additional savings will help them reach their long-term goals faster.

Start Small, And Set An Example

It is helpful for your children to see how you budget, but start small. For example, allow them to help you plan the weekly grocery shopping. Start by planning a list from sale flyers and coupons, and then stick to that list at the store. This can turn into a saving game for them.  Remember, children will learn from your example.  So telling them about budgeting is important, but it’s much more impactful if they see you following a budget yourself.

This information is brought to you by GreenPath Financial Wellness

Youth Month

Save small. Dream big.

We're celebrating Youth Month all April long! Be sure to check out our blog each week or follow is on social media for a new youth financial literacy topic.

You can also check out our Youth Program to help get your child started on the path to smart money management.

youth program

• By Kevin Alvarez

Financial Literacy For Kids

Did you know April serves as both Financial Literacy and National Credit Union Youth Month?

It’s never too early to begin teaching our youth about money. Financial literacy taught at young age becomes foundational value in adulthood. In fact, this is one of the most important areas where you can truly change the course of your child’s life. Financial literacy for kids can be fun. Educating your children about financial wellness will help them build healthy spending habits for the future and SafeAmerica Credit Union is here to help!

We're kicking off April with a series of financial education blogs to make it easier for parents to get the ball rolling for their children’s understanding of financial skills. All month long we will be sharing different concepts, financial terms and talking points for you to go over with your youth.

Here are some fun ways to teach your kids about money.

1. Play Games That Involve Money

One of the best ways to teach a lesson is by doing so without your child even realizing they are learning. Play games that include a financial component like Monopoly or Life and help your child strategize during the game. This will help your child learn the importance of budgeting and planning for the future, all under the guise of play.

2. Make A Wish List With Your Child

An important part of financial literacy is creating a set of priorities. We can’t have everything we want all at once, but if we plan ahead, we can hit our goals over time. This is a lesson that children can learn. Sit down with your child and have them list 10 things they want. Then have them rank them from most important to least important. Once the list is created, strategize with your child about how they can achieve their wishes.

3. Teach While You Shop

Take your child shopping and actively explain your decision-making process. When you arrive at the store, tell your child how much money you have to spend and what your priorities are. Show your child why you are picking one item over another and explain things like discounts and coupons. Additionally, give your child small amounts of money to spend themselves. You’ll be surprised at how happy your child will be to spend $2 on anything they want! They’ll also learn the importance of spending with a limited budget.

4. Link Allowance To Chores

To teach your child that money is earned through work, make sure the connection between allowance and chores is clear. You can do this by only giving your child an allowance after his or her chores are completed. When your child does an exceptional job, you can even pay them a bonus as a reward for good performance. This will instill the lesson that you have to earn money—it isn’t owed to you.

5. Split Money Into Categories

Get a piggy bank that splits money into spending, saving, and giving. Teach your child about what each section represents and how they are permitted to use the money in each section. Every time you give them their allowance, talk them through how they plan to allocate their funds. Place the piggy bank next to your child’s wish list, so that their spending and saving goals are clear to them. Also, talk through the causes your child thinks are important, and when they hit a giving goal, donate the money to that cause in your child’s name.

In short, teaching children about finances can be easier than it might seem. It just takes a bit of forethought, a little patience, and some creativity. Once your child learns the basics of finances, you can increase their financial responsibilities by upping their allowance or bringing them into the conversation about family financial matters.

And remember, a financially literate child grows into a financially responsible adult!

This Information is brought to you by GreenPath Financial Wellness

Save small. Dream big. We're celebrating Youth Month all April long!  Be sure to check out our blog each week or follow us on social media for a new youth financial literacy topic.

You can also check out our Youth Program to help get your child started on the path to smart money management.

Youth Program

• By Kevin Alvarez

Why Refinancing Your Auto Loan Makes Cents!

When saving money pivots to the top of your priorities, an auto refinance may be an opportunity to create instant savings on your monthly auto payment. Everyone’s financial situation is unique, so it may or may not be a financial fit for everyone.

Here's How:

When you refinance your auto loan, what is actually happening is your loan is being paid off and the balance is transferred to a new lender (who may have a better rate and/or term like SafeAmerica’s current auto refinance promotion).

When It Makes The Most Cents:

The whole point of refinancing is to purposely switch from your current interest rate and payment terms to a lower interest rate and better terms. Of course, shopping around for lower rates is the first step towards identifying if you can create monthly savings for yourself.

Maybe you obtained a higher earning position since you first took out your auto loan or even have seen an improvement to your credit score. Either way your chances of qualifying for a lower rate are dramatically higher than when you first got your auto loan interest rate.

While lenders use numerous factors which all contribute toward the determination of your rate, a good point of reference would be to focus on your debt-to-income ratio along with checking if your credit score has improved.

Here's Another Situation To Consider:

If you are unable to qualify for a better rate, you may be able to extend your repayment period. While you would be extending the amount of interest paid, you would be reducing the amount of money owed on your monthly payment. Just know, you will be paying more interest over the life of the loan even with your monthly payments being smaller.

Do your research and make sure to shop around for rates and terms you are comfortable with and more importantly, make the best decision for your specific financial situation. Be aware of any fees lenders may charge to refinance your auto loan. It's also important to be aware of your vehicle’s equity, age and total mileage. All are important vehicle trait’s lenders take into consideration and ultimately determine if your vehicle qualifies for refinance.

Credit unions more often than not, offer incentives and reduce fees to attract members and help them save. See what SafeAmerica Credit Union has to offer for Refinancing your Auto Loan!

Refinance with SAFEamerica credit union

• By Kevin Alvarez

Free Webinar March 9 — Starting From Scratch: How To Build Credit

This free, one hour webinar is presented by GreenPath Financial Wellness

What do renting an apartment, getting a job offer, and car insurance rates all have in common? Your credit history could impact every one of these things (and more)! Credit is important for more than just getting a loan, although it impacts that too. If you know you need to build credit and aren’t sure how to do so without going into debt, this webinar will provide guidance and tools to start you down the path to building positive credit history. Whether you have never had any credit history or are looking to rebuild credit after an extended period without, this webinar will cover why it is important to build positive credit history and how to do so responsibly.

Click through each tab below to learn more.

Who Should Attend

  • Anyone with no credit history
  • Anyone with no credit history for 5+ years
  • Parents of teenagers who want to help their children start building good credit

What You Will Learn

  • Why credit is important
  • Tools to start building positive credit history
  • Healthy credit habits for using credit responsibly

Details

Date: Wednesday, March 9, 2022

Time: 10:00 am PST

This webinar will be recorded and a link will be sent out to all registrants after the webinar.

Click the red button below to register.

Register Now

• By Kevin Alvarez

Here’s How An Auto Refinance Can Save You Money On Your Monthly Payment!

Did you know an Auto Refinance can provide instant savings on your monthly car payment? Maybe you already knew that? Either way, read through to see if there is something more you can add to your own financial strategy!

Here's an example of what an auto refinance is:

You pay off your auto loan balance from one lender and transfer the balance to another lender with a better rate and/or term.  For example, you have an auto loan with an APR of 7% and refinance with another lender to a new lower rate of 3%. The 4% drop in interest will provide you with a new lower monthly payment.

When it's best to refinance:

There are multiple opportunities in which it makes sense to refinance your auto loan. They are:

  • Pay less in interest - If you find a lower rate than what you’re currently paying, you could save in the amount of interest you pay over the life of the loan.
  • Lower payment - If you’re looking for a lower payment, a reduced rate and/or term extension could help.
  • Shortened term - If you’re looking to pay off your loan earlier and can afford the payments, a refinance can help direct that money toward principle while paying less in interest.

The cons to refinancing:

When making any financial decision, it’s always best to weigh the pros and cons of each situation.  When refinancing your auto loan, the option to extend your repayment period will allow for a lower monthly payment but it also extends the amount of interest owed. In general, you will pay more in interest over the life of the loan, even if your payments are smaller.  You can also risk owing more than the car is worth if you extend your term too long.  Use a financial calculator to compare your options.

Try Our Calculators

When deciding if a refinance is right for you, have a clear goal in mind.  Are you looking to reduce your payment, pay your loan off sooner, or maybe both!  You have options.  Do your research to find what other financial institutions have to offer; lower rates, no fees, and term options that work for you.  Run the numbers and take advantage of the tools that are available to you as a member of SafeAmerica Credit Union.

Refinance with us

As a member of SafeAmerica Credit Union, you can refinance your auto loan from another financial institution and take advantage of exclusive member-only savings.

  1. Great rates
  2. Flexible terms
  3. No fees

Auto Refinance

Learn more about our Auto Loans

• By Kevin Alvarez

Tips and Tricks for Your Summer Road Trip

A historic period of uncertainty, finally on its way out. With the reopening of the state of California upon us and the built up frustration from stay-at-home orders set back in March of 2020, many Americans are expected to travel up to 500 miles from their homes this summer via road trips as a way to help wash away the stagnant year we all never saw coming.

California families have been juggling a handful of “from home” routines, from distance learning to working from home and everything in between for nearly 16 months now. So with little ones out of school for their summer vacation and recent high school and college graduates (congratulations!), this summer season is going to be one we will all appreciate for years to come.

To help our members and community prepare for upcoming travel we came up with a list of things to prepare you for an easy-going road trip (or two or three).

The summer heat influences a handful of important components with your vehicle—air conditioner, tires, oil, battery, fuel, coolant and even your wiper blades. Keep this heat factor in mind while reading over this blog post.

Vehicle Road Trip Reminders

Check Your Fluids

According to AAA you should be checking your vehicle's fluids more often than the dealer's recommended amount, with consistent monitoring you will have a better idea of when your vehicle's fluids need to be topped off.

Oil - When was the last time you had an oil and oil filter change? New vehicles require an oil change every 5,000 miles or every 6 months, while “older” vehicles require an oil change every 3,000 or 3 months. Know the life of your oil and if it can endure a road trip at the distance you plan on covering. There are plenty of recommendations from each of the many auto makers out there. Make sure you are aware of your specific vehicle’s recommendations for an oil change service.

Brake Fluid – Do you remember the last time you changed your brakes, let alone the brake fluid? Brake fluid is used every time you press on your brake pedal and it is generally recommended to flush your brake fluids every 30,000 miles or 2 years.

Anti-Freeze/Coolant/Radiator Fluid – This summer is due to be a hot one. On top of staying hydrated, drivers need to make sure their vehicles coolant is topped off to prevent radiators from overheating and leaving you stranded.

Wiper Fluid/Blades – A windshield full of bugs is bound to happen and who knows what other muck gets on there. Go over your wipers and windshield to clear any debris that may be lurking on the base of your wiper blades as well as the wiper blades themselves. There are occurrences when debris clings to the blades themselves and scratches your windshield. This can also happen from old and worn wiper blades. The metal design which presses the blades down to your car could be exposed and leave “streaks” or scratches on your windshield. Due to excessive heat, you can prevent the rubber blade from melting onto your windshield by leaving them in the standing up maintenance/wash position.

Transmission Fluid – Do you know the status of your transmission? What about transmission fluid? If your vehicle has been jerking when you accelerate or leaving a burning smell, it may be best to get your vehicle looked at by a professional and maybe even using a different vehicle for your road trip.

Check Your Vehicle's Belts

  • Serpentine Belt
  • Drive Belt/ V Belt
  • Timing Belt
  • Accessory Belt

Timing-belt of alternator.

Check Your Vehicle's Hoses

  • Low Pressure Fuel hose
  • High Pressure Fuel hose
  • Radiator hose
  • Heater Hose
  • Power Steering hose
  • Hydraulic Hose
  • A/C Hose
  • Vacuum Hose

Check Your Tires and Tire Tread

Do you remember when you last changed your tires? Look over your wheels for any signs of tears or for any foreign objects such as screws that may compromise your wheel’s integrity. If it’s been a few years since your tires have been changed or even rotated them, then it wouldn’t hurt to check the tread life of all four of your vehicle’s tires.

You Can Easily Do This With A Penny

  • place a penny into a groove with the side of Abraham Lincoln’s portrait facing you
  • Rotate the penny so the top of Abe’s head is touching the surface of your tire
  • Based on how much of Abraham Lincoln’s head you are able to see, will determine if you should change your tires. If you are able to see his head, it is time to change your tires right away.

Inspecting tire tread using a penny.

Check Your Battery

Go over your battery’s connections to make sure they are clear of any debris or battery corrosion and ensure your battery is fastened securely to your vehicle. You can always visit an auto parts store for a free battery test to provide an accurate reading of your battery’s overall life.

Example of a corroded car battery.

Emergency Roadside Kit SuppliesTo make unexpected roadside situations easier to bear with, you should consider carrying the following items in your vehicle:

  • Emergency contact info
  • Insurance/registration information
  • Reliable tow company information
  • Spare tire that is inflated to its specified pound per square inch (psi)
  • Lug nut lock key
  • Lug nut wrench
  • Reliable Jack stand Kit(make sure to get one that is strong enough for your vehicle)
  • Car escape tools/Pocket knives (seat belt cutter/glass breaker)
  • Jumper cables
  • Basic assortment of tools to operate on your vehicle
  • Blankets
  • A change of clothes
  • Flashlight(s) with extra batteries
  • First Aid Kit
  • Water
  • Nonperishable foods
  • Can opener
  • Phone charging cable(s) AND wall plug
  • Safety vest and hazard reflective roadside triangles (set of 3). Place the first triangle 10 feet behind your vehicle, the second triangle 100 feet behind your vehicle and the final triangle, 300 feet from your vehicle. All reflective triangles should be on the side closest to oncoming traffic.

red triangle red emergency stop sign red emergency symbol.

There are many variables that need to work together efficiently in order have a car running smoothly and unless you managed to grab a new auto during the microchip/parts shortage this last year, best to take all preventative steps available to ensure a safe and memorable road trip.

Get out and explore this summer. A Personal Loan from SafeAmerica Credit Union can help make it happen – and the funds can be used for just about anything, including road trips!

We want to help you make memories. Act now to receive a free AAA membership with your new Personal Loan. AAA offers travel services, discounts and insurance, road-side assistance and more!

Free AAA Membership

Sources

  1. “Quick Tips For Checking Your Vehicle's Fluids,” AAA (blog), accessed July 7, 2021, https://www.aaa.com/autorepair/articles/quick-tips-for-checking-vehicle-fluids
  2.  “Get Your Vehicle Check During AAA Car Care Month,” AAA (blog), October 9, 2013, accessed July 7, 2021, http://news.aaa-calif.com/news/get-a-vehicle-check-during-aaa-car-care-month
  3. "Tire Tread Depth" Firestone (blog), accessed July 7, 2021, https://www.firestonecompleteautocare.com/penny-tire-test/
  4. "How To Test A Car Battery At Home with (No Equipment)" (blog), October 23, 2018, accessed July 7, 2021,  https://www.firestonecompleteautocare.com/blog/batteries/how-to-test-car-battery-at-home/
  5. "The Best Gear For A Roadside Emergency" (blog) May 18, 2021, accessed July 8, 2021, https://www.nytimes.com/wirecutter/reviews/best-gear-for-a-roadside-emergency/
  6. "Know-How Notes: All About Hoses" (blog), accessed July 8 2021, https://knowhow.napaonline.com/know-notes-hoses/