SafeAmerica Credit Union

Debt Management plans

• By Kevin Alvarez

What To Do If Your Credit has Fallen – Five Tips

Your credit score can affect your life in a lot of ways, from whether you are eligible for a loan or credit card, or qualified for a security clearance. If your credit score has fallen or you want to improve your credit score, these tips can get you started.

What is A Credit Score?

A credit score uses historical information about a person’s past use of credit to calculate the likelihood that they will pay back what they owe on time and in full. Credit scores are used to determine qualification for borrowing money as a loan or on a credit card, and they can affect your interest rates, insurance premiums, leases, or eligibility for a job or security clearance. 

Ranging from a low of 300 to a high of 850 (sometimes referred to as “perfect credit”), credit scores are calculated based on payment history, amount owed, length of credit history, types of credit used, and new applications for credit. 

In general, a score of 660 and above would make a borrower eligible for credit with favorable interest rates. A score below 600 may result in difficulty getting approved for credit and is likely to be subject to high-interest rates.  

If you don’t know your credit score, you might be able to find it on your bank or loan statement or credit card bill. You can also purchase your credit score directly from one of the three credit bureaus, Equifax, Experian or Transunion. Click here for a Credit Score Guide

5 Tips to Improve Your Credit Score

#1. Get Your Payment in Before The Buzzer

Paying your bills on time is the biggest single factor used to calculate your credit score. Late payments (even a couple of days), past due accounts and accounts in collections, have a negative impact on your credit. Regular, on-time payment of the minimum amount (or greater) will improve your credit score. A positive payment history in the range of 18 months or longer will begin to show results in a growing credit score.

If you are falling behind on your bills, look for ways to get back on track. Use a monthly budget to plan your spending and make sure that your bills are covered. Automated payments can also help you avoid late fees and ensure on-time payment. If you know you will miss a due date, call your credit card company or lender. They may be able to help by moving your due date out.

#2. Pay off Debt

How much you owe is another big factor in calculating your credit score. If you have a large amount of debt or are carrying balances on credit accounts for long periods of time, it can negatively affect your score. Paying off the debt will help improve your credit score.

Start by prioritizing your budget to pay down your debt. Look for places you can redirect non-essential spending to pay extra on your credit accounts. A credit counselor can walk you through different options for dealing with debt and may be able to help you pay it off more quickly.

#3 All Things in Moderation - Use 30% or Less of Your Credit Limit

The amount of credit you use (also called credit utilization) also affects your score. Our financial counselors suggest using less than 30 to 40% of your available credit. Spending above that threshold, maxing out your credit, or carrying high balances relative to your credit limit will cause your score to fall. However, regularly using small amounts of credit and paying it off will increase your score. Generally speaking, having credit cards or installment loans and paying them on time and in full will improve your credit score over time. People without established credit typically receive lower credit scores. 

If you are using more of your credit limit than you would like, take a look at how and why you are using credit can help you make adjustments in your budget and spending choices to reduce your reliance on credit.

#4 Talk to A Credit Counselor

Talking to a credit counselor won’t have a direct effect on your credit score, but it can give you insight and information that you can use to improve your credit. We will work with you to understand your financial situation, explore different options, and make a personalized plan. We can help you review and understand your credit report. If debt is preventing you from making progress, we can help you explore debt management plans and other options that can accelerate your path forward. 93% of people who talk to us leave the conversation with a plan for achieving their goal.

#5 Stick with It! Credit Building is a Long-Distance Run

A history of credit that you have paid back on time and accounts that you have held for five years or longer have a positive effect on your credit score. Quickly opening multiple accounts, suddenly carrying balances for a sustained period, or even closing unused accounts have a negative effect on your score.

Events like foreclosure and bankruptcy, while they serve a very important purpose for those with severe debt, have a significant and lengthy impact on your credit score. (We are not lawyers, and this is not legal advice. If you are considering one of these options, we encourage you to consult a legal professional and to investigate other alternatives as well.)

Your credit score is based on patterns over time, with an emphasis on more recent information. Improving credit and rebuilding a credit score that has fallen will take some patience, but it can be done! Credit scores can and do change.

Help is Here

When it comes to building your credit history, you don’t have to do it alone. Through our partnership with GreenPath Financial Wellness, you have direct resources for improving your financial wellness, including FREE financial counseling.

Learn more by clicking the button below.

GreenPath Financial Wellness

GreenPath Financial Wellness

• By Kevin Alvarez

5 Holiday Spending Tips to bring You Less Stress (and More Joy!) This Holiday Season

Information brought to you by our partner, GreenPath Financial Wellness

After a year full of twists and turns brought on by a global pandemic, many Americans are understandably looking forward to the holiday season.

This year, many Americans may find they are dealing with financial setbacks such as a loss of employment, reduced income, or other unanticipated expenses that may make it more difficult to avoid having holiday debt follow them into the new year.

Here are five tips designed to give you less stress and more joy this COVID holiday season:

Set a Holiday Spending Limit

During the holidays, it can be easy to let spending get out of control. Put a cap on your spending by creating a holiday budget / spending plan.

Be sure to factor in additional non-gift related expenses that can easily add up—things like holiday photos, decorations, food, and if your family gathering is cancelled, shipping of gifts to love ones.

Avoid Putting Holiday Debt on Credit Cards

The number one of financial wellness? Avoid spending money you don’t have. While it’s easy to do, putting holiday spending on credit cards can be risky—
especially if you don’t have the funds to pay it off when the bill comes due.

According to a recent survey, Americans racked up an average of $1,325 in holiday debt. Of those surveyed, 75% said they wouldn’t be able to pay it off in January, with 15% saying they only intended to pay the minimum monthly payment. In case you’re wondering, that translates to over $600 in interest and 5 years of making payments—ouch!

Trade Pricey for Priceless

A great gift doesn’t have to be expensive. Think outside the box and treat your loved ones to a thoughtful gift that generates excitement without the price tag.
Maybe that’s a handmade item, DIY project, a fun experience, a coupon book, or just the gift of your time.

Keep Your Personal Info Safe

The holiday season is a time when people are more vulnerable to identity theft scams. Not only are they making more purchases than at any other time of year, but they are often distracted when doing so.

According a recent Experian study, as much as 43% of holiday shopping identity theft occurs online. As the current COVID environment drives more people
than ever to online shopping, it’s important to be aware of the best ways to protect yourself from identity theft:

  • Stay up-to-date with online scams
  • Use strong account passwords
  • Monitor your credit report

Stay the Course with Free Financial Counseling from GreenPath

If you are caught up in the holiday frenzy, and you are stressed about overspending, the counselors at GreenPath can help. In fact, 90% of people surveyed report feeling better prepared to handle their finances after speaking with a financial counselor. Get a head of your holiday finances and connect with a counselor today—it’s free, no pressure, and 100% confidential.

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• By Kevin Alvarez

7 Tips to Get Smart About Debt

Information brought to you by our partner, GreenPath Financial Wellness

Our finances are intertwined with our everyday lives and affected, debt can easily become a problem. It's best to stay grounded and identify where the "leak" is coming from, why the "leak" is happening and what to do next to seal the "leak".

1. Get an idea of what you are currently spending.

To know where you’re going, you have to know where you’re coming from. Are you spending more than you make? Do you have excess money each month that you could be putting toward your debts?

2. Take a look at your spending habits.

Once you have a full financial picture of your monthly surplus (or deficit), figure out what your spending habits are and how you might change them to get out of debt. Maybe you’re spending too much on subscription services – or realize you’re spending more than you allotted for groceries each month.

3. Prioritize expenses and identify areas where you may be able to save.

Once you have an idea of where you are spending and why, see if there are areas where you can cut back.

Hold yourself accountable, and check back in on your spending habits.

4. Check the plan.

Plan your paychecks and check back to see how your actual spending compares with your plan. Use a highlighter to compare your paycheck with where your money needs to be distributed to and make any adjustments needed.

5. Automate everything.

Set up direct deposits and automated payments so that you don’t miss due dates and get hit with a late fee. Use alerts and overdraft protection to help you avoid mistakes.

6. Choose a debt payoff strategy that works for your situation.

Many people consider paying the minimum on all debts and focus extra payments on one debt at a time. When you pay one account off, they redirect the monthly payment to the next one in line, adding it to the minimum they were paying already. This way, each time you pay off one debt, your payment on the next one gets bigger. This could be a good approach for you to consider.

7. Look into a debt management plan.

Depending on your situation, there may be options for you to get out of debt more quickly. If you have high-interest credit cards or other unsecured debts, a debt management plan could be just what you need to get out of debt for good.

A debt management plan works with your creditors to bring your accounts current, lower interest rates, and eliminate fees. This means that more of your payment goes toward reducing your account balances. It can help you pay off debts faster and save money on interest.  An added benefit is that once the debt management plan is established, diminishing collection calls and creditor balances help reduce worry and stress about your debt situation.

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• By Kevin Alvarez

What is A Debt Management Plan

Information is brought to you by our partner, GreenPath Financial Wellness

Learn how to pay off your debt with GreenPath! They have built one of the nation’s most trusted debt management programs. With more than 60 years of experience supporting people to eliminate debt.

If you want to get out of debt and reduce financial stress, you may find debt relief through the GreenPath Debt Management Plan. If it makes sense for your situation, we will contact your creditors to propose mutually agreeable debt repayment terms. A Debt Management Plan may:

  • Stop collection calls
  • Lower interest rates
  • Lower monthly payments
  • Waive late fees and over-limit fees

A Debt Management Plan is designed to pay off the entire amount that you owe, usually within three to five years. It can help you pay off credit card debt faster, and save money on interest charges.

The first step is a free debt counseling consultation

When you call, you’ll talk to a NFCC-certified credit and debt counselors.  We’ll review your financial situation together, and make a personalized plan to get your finances back on track. We’ll explain the options and give you the information you need to make a choice that works for you.

 How debt management plans work

The debt management plan consolidates your debt into a single payment. Each payday, you automatically deposit money into your GreenPath account, and we use that money to pay on your behalf. We may be able to arrange lower interest rates and monthly payments with your creditors, so you can pay off debt faster and save money. Once creditors agree to the program, collection calls stop and you see your balances start to go down.

When you sign up for a debt management plan, you have an entire team of GreenPath people behind you. You’ll get information and support when you need it. We’re here for you at every step of the journey.

You can call them anytime during business hours to reach a debt counselor if you need advice, or to talk to your Client Success Team about your account. You also have instant access to account information through their online debt management portal.

You also have access to a community of others who are paying off their debt in a private online group. This positive community of support is a great place to ask questions, share tips, and get friendly moral support to make your journey easier.

GreenPath believes in their clients 1000%, and we love nothing more than seeing you succeed.

Help is here

Last year, GreenPath helped more than 65,000 households pay off over $200 million in debt. We do this by putting people — you! — at the center of our work. Our counselors receive training in compassion and empathy. It’s our job to listen without judgment, and to treat our clients with respect.

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