SafeAmerica Credit Union

Walnut Creek

• 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

Financial Terms To Teach Your Kids

It’s never too early to start teaching your kids about finances. After all, it is a topic they will use for the rest of their life. Breaking down some the key financial terms will help them have an understanding of a few fundamental concepts.

Here are some terms you can teach your child and why it’s important for them to know.

Budget

What is a budget?

A budget is a plan that helps you keep track of your money and where it goes. One way parents like to teach kids how to budget is to categorize money into three “buckets”: give, save, and spend.

Why is a budget Important?

A budget allows you to plan out your finances for the future and ensures you’ll have enough money to pay for all your “needs” and, if you have money left-over, to pay for all your “wants”. It provides structure towards reaching a financial goal, such as saving for a video game system, a vacation or even a college education.

Checking Account

What is a Checking Account?

A checking account is a contractual relationship between you and your financial institution where you can make day to day transactions. The financial institution holds your money in a safe place and helps to facilitate your purchases. You are responsible for handling your account wisely by not overspending the money you have in your account.

Why is a Checking Account Important?

A checking account makes your money accessible and serves as a way to keep track of your spending. It also keeps your money safe, meaning it can’t be lost, stolen or damaged. Institutions must be insured in order to operate, so there’s no risk and much safer than carrying cash.

Credit and Credit History

What is Credit?

Credit is a way to borrow money (such as a credit card or loan) with the agreement of paying it back in full, plus interest. Paying back the borrowed amount on time is reflected on your credit report/history. One important concept to remember is that credit isn’t free and should only be used if you’re able to pay it back right away.

Why is Credit History Important?

Developing good credit history allows lenders see how responsible you are when it comes to paying that money back. The more on-time payments you make, the better your credit becomes, making it easier to borrow money in the future, rent an apartment, or even get a job.

Credit Score

What Is a Credit Score (also known as FICO Score)?

A credit score is a number that lenders use to measure your credit worthiness. Your credit score is influenced by a number of things such as the amount of open credit accounts, overall amount of debt you have and your repayment history (making payments on-time). Credit scores range from 300 to 850 and lenders use these scores to determine how much risk they will take on when lending to you. The higher your credit score, the lower your interest rate will be (less risk) and vice-versa; the lower your credit score, the higher your interest rate will be (more risk).

Why is a Credit Score Important?

The better the credit score, the easier it will be to reach life’s milestones. A good credit score can help you get a lower interest rate on a loan (like a car loan or mortgage), thus you pay less over the lifetime of the loan. A good credit score can even help you get an apartment or job. Overall, it pays to have a good credit score! Literally.

Loan

What is a Loan?

A loan is a sum of money that you borrow with an agreement to be paid back with interest. One way to help your child understand loans, is to explain why people take out loans in the first place. A great example is a car or mortgage loan. These items usually cost a lot of money, so it becomes necessary to borrow the money. Having that good credit score (as explained above) will help you get a lower interest rate on that loan, making it more affordable. Agreeing to the terms of a loan means you’re obligated to pay it back with the agreed upon interest. Failure to do so can be detrimental to your good credit.

Why Is Having a Loan Important?

Having a loan allows you to enjoy the item you borrowed money for right away. Rather than saving up $20,000 for a car, you can take out an auto loan to immediately have access to the vehicle and repay on a monthly basis until the loan has been paid off. Paying off loans strengthens your credit score and allows you to become prepared for any future or bigger purchases.

Debt

What is Debt?

Debt is money borrowed (a loan) which has not been paid off. Types of debt range from credit cards and student loans to major purchases such as vehicles and mortgages.

Why is Debt Good?

Borrowing money and having debt is typically the only manner in which some people will be able to purchase important high cost items such as a home or higher education. Debt is okay if it’s going to help you make money in the future, whereas taking on debt on items such as cars or clothes is not recommended based on the depreciating factor associated with these items.

Interest

What is Interest?

Interest has two sides; it is either something you pay (an interest rate on a loan) or something you earn (an interest rate on a savings account). Show your children the interest you pay on a loan, like a vehicle loan, each month. And then also show them that when you deposit money into a savings account (your “save bucket” from earlier) that the bank pays you for the deposits you place there.

Why is Interest important?

Whether you’re paying interest or earning interest, the amount of interest is important to understand. When obtaining a loan, you want to look for an institution that offers the best rate (lowest rate or APR). That combined with your good credit score will help you get the best deal. The same goes for deposits. When saving your money, you want to look for the highest yield (or APY). This will get you most amount of interest earned.

Taxes

What are Taxes?

Taxes serve as payment to the government and are used to pay for things like improving public schools and fixing the roads. Taxes are taken from your paycheck and the amount you pay depends on how much money you make. A great way to explain it is to relate it to their allowance. Take a small amount from their allowance and put it away to be used toward a household expense, like an improvement!

Why are Taxes Important?

Taxes are the main source of revenue for the government. Without taxes, funding for many of the public benefits we take advantage of every day would be impacted severely.

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

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

Tax Return Delays Likely, Here’s What To Do This Tax Season

Tax season is fast approaching! The pandemic has affected production on a multitude of levels and has taught us to be prepared for any delays whether it be shopping in person or even online. The Internal Revenue Service has shared it is faced with backlogs of up to 6 million in unprocessed individual returns. This tax season could very well have delays we are not in favor with. To help alleviate the burdens of the IRS and improve our chances of receiving our returns in a decent time frame, the IRS strongly suggests you do the following:

Use Free Online Resources Provided By The IRS

Filing taxes always brings a myriad of questions; questions we never know who to direct to, but the IRS. For this year’s tax season the IRS has shared, instead of calling in with your questions, you can visit the IRS’ Volunteer Income Tax Assistance (VITA) and/or Tax Counseling for the Elderly (TCE). Both programs are managed by the IRS and staffed with IRS-certified volunteers, who must take and pass tax law training which meets or exceeds IRS standards. To learn more and find a location near you, click here.

File Your Taxes Electronically This Year

The IRS strongly suggests taxpayers file their tax return electronically along with their direct deposit information as soon as all their tax documents have been made available. Tax payers should also check on the accuracy of all their information. Filing a tax return with errors or one that is incomplete may add to the overall delay of receiving your tax return. For the latest IRS forms and instructions, you can visit the IRS website at IRS.gov/forms.

Expect To Receive IRS Letters This Tax Season

People receiving these letters should keep them. Do not throw them away. These letters can help taxpayers, or their tax professional prepare their 2021 federal tax return.

Letter 6419 - Advance Child Tax Credit Payments

Did you know the Child Tax Credits were actually advanced payments on your 2021 taxes? The tax credit was temporarily expanded from $2,000 to $3,600 and the government began to pay half of the available credit via monthly payments from July through December. Those who opted out of advance payments will be receiving full refund amounts.

Each individual, even those who file jointly, should have received letter 6419, 2021 Advance Child Tax Credit. The IRS began sending Letter 6419 via the United States Postal Service back in December 2021 and has continued into the month of January. This letter contains information such as the total Advance Child Tax Credit amount as well as the number of qualifying children used to calculate the overall amount. Anyone who did not receive any payments listed is instructed to call the IRS before filing a return.

Letter 6475 - Economic Impact Payment

Letter 6475, Third Economic Impact Payment (Stimulus Money) was also issued out to individuals who received a third payment in 2021, in late January. This letter is needed to provide verification to the IRS that the taxpayer received the money.

What if I never received Letter 6419 or Letter 6475?

As mentioned above, to ensure you receive your refund, you will need the information on both letters. If you are missing either letter you can use the child tax credits portal to verify the information you need.

You always have the option to call the IRS at 1-800-829-1040, but remember, delays are imminent and strongly suggested you complete all your tax needs, electronically.

For more important IRS information, you can click here.

Tips To Make Filing Easier

  • Gather all your 2021 tax records, Individual Tax Payer Identification Numbers, Adoption Taxpayer Identification Numbers, and this year’s Identity.
  • Set up or log in securely at IRS.gov/account to access personal account tax information including balance, payments, and tax records including adjusted gross income.
  • Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers.

Key Filing Dates

Below are important dates taxpayers should be aware of this season:

April 18 — Due date to file 2021 tax return or to request an extension and pay tax owed due to Emancipation Day holiday in Washington, D.C., even for those who live outside the area.

April 19 — Due date to file 2021 tax returns or request extension and pay tax owed for those who live in MA or ME due to Patriot’s Day holiday.

When it's time to file your return, remember that filing your taxes electronically and including your direct deposit information would result in the quickest possible return.

SafeAmerica Credit Union Members Save

Filing your taxes doesn't have to be taxing. As a Safeamerica Credit Union member, you now have more choices and more savings this tax season. We've partnered with TurboTax and H&R Block to help you file your way and get special member savings.

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The information in this article is for general educational purposes only and not intended to provide specific advice or recommendations. Please discuss your particular circumstances with an appropriate professional before taking action.

• By Kevin Alvarez

The 5 Factors That Affect Your Credit Score (And Simple Ways to Boost Them!)

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

Whether you’re looking to get your first credit card for everyday expenses or take out a mortgage to purchase your first home, credit is an essential tool for helping people to meet their financial goals.

When applying for a line of credit, the higher your credit score, the more likely you will be to qualify, and the more options you will have available to you.

Here, we’ll breakdown the 5 factors that affect your credit — in order of most heavily weighted to least—and the simple  yet effective steps you can take to give your score a boost.

Understand Your Current Credit SnapShot.

Federal law requires each of the three nationwide consumer credit reporting companies -Equifax, Experian, and TransUnion -provide you a free credit report every 12 months if you ask for it. While these reports don't contain your actual score, they can be very helpful in identifying what might be affecting it (as well as any inaccurate information that may need correcting). Request yours at annualcreditreport.com.

1. Payment History (35%)

Payment history 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 all have a negative impact on your credit. Regular, on-time payment of the minimum amount (or greater) will improve your credit score. A non-time payment history in the range of 18 months or longer will begin to show results in a growing credit score.

Set up automatic payments.

If your late payments are due to forgetfulness, this is the easiest way to ensure you never miss a future payment.

Change your billing due date.

Suppose you have multiple bills due on the same day of the month. In that case, it may be worth changing your payment due date to align better with your personal situation (e.g.,spacing out bills to make them more manageable, or ensuring your payment date is after an income deposit date.)

Explore hardship/deferment options.

If you’re having trouble making ends meet, call your creditors and request a forbearance or payment deferral. They may also be able to waive late fees or even allow a lower payment for a period of time.

2. Amount Owed (30%)

Your credit utilization is determined by the amount you owe—not relative to your income but, compared to the total credit limit available to you, expressed as a percentage.(For example, if your card balance is $600 and you have a spending limit of $2,500, your credit utilization is $600/$2,500 or 24%.) As a rule of thumb, your credit utilization should be no more than 30.

Quick Tips for Improving Amount Owed:

Pay down your balance early.

If you can make small payments throughout the month, this can help keep your balance down and lower your credit utilization.

Decrease spending.

Find areas where you can cut back on spending to lower your utilization. Our Prioritizing Expenses Worksheet can help you to determine what to cut.

Ask for a credit line increase.

Increasing your credit limit is the simplest way to decrease your credit utilization with out having to cut back on spending.

3. Length of Credit History (15%)

Although not the most heavily weighted category, the length of a borrower’s credit history is important. It’s an indication to the financial institutions what kind of borrower you maybe in the future. In addition to the overall time an individual has had credit accounts open, credit history is also determined by how long specific types of accounts have been open, and how long it’s been since those accounts have been used.

Quick Tips for Improving Credit History:

Get a secured credit card.

Backed by a cash deposit, a secured credit card can be an excellent low-risk way for those who have not had a credit card previously to start building credit.

Keep credit cards open.

Closing a credit card can negatively affect your score. If you have cards you aren’t using, placing a small recurring charge on them (such as a phone bill or streaming subscription) can help to keep the card active while keeping your overall credit utilization low.

4. Credit Mix (10%)

Credit mix is determined by looking at the types of credit you are carrying (this includes credit cards, retail accounts, installment loans, mortgage loans,etc.) as well as your payment history in each area.

Quick Tips for Improving Mix:

Explore loan options that work best for you.

Your credit mix isn’t the most impactful category, and you shouldn’t pursue loans unless they make sense for you and your personal needs. In fact, you may already have a fair credit mix—things like credit cards, personal loans, auto loans, and mortgage loans are all considered different types of credit.

Make sure you pay loans on time.

A good credit mix is moot if you aren’t making timely payments–ensure you are making at least the minimum payments on your outstanding loans each month.

5. New Credit (10%)

Research shows that opening several credit accounts in a short amount of time represents a more significant risk—especially for people who don’t have an established credit history.

Quick Tips for New Credit:

Open new credit accounts only as needed.

Every time you apply for a new credit card,this creates a hard inquiry on your credit,which will automatically lower your score. Having more credit than needed can also encourage unnecessary spending and lead to increased debt.

Understand how hard inquiries show upon your report for different types of loans.

While multiple inquiries over a short time frame for credit cards may result insignificant score damage, other types of inquiries—such as home or auto loans—are reported a little differently. Since lenders know people often shop around, these types of inquiries won’t hit your report for 30 days, and when they do,they’ll be counted as a singular inquiry.

So, there you have it. If you implement these tips, you should start to see a gradual increase in your credit score. Remember: Your credit score is based on patterns over time, with an emphasis on more recent information. Improving credit won’t happen overnight, but with persistence and consistency, your score should gradually improve over time!

Free Credit Report Review

Need some extra help navigating your credit report? GreenPath’s NFCC-certified credit counselors can walk you through a free review of your credit report. They’ll explain how to read the report and help you to make a plan for managing your credit score to support your goals.

Learn More

• By Kevin Alvarez

Understanding and Preparing a Savings Account – Financial Literacy Month

Have you been keeping an eye out on the housing market? What about the auto industry? Well before you can purchase your first home or a brand new car, taking control and understanding your debt is needed. The journey of reaching your next financial goal may sound like a daunting task, but having the understanding of what it will take to reach those goals is the mindset to strive for. Through then, you can create short term goals which will assist with building up to the overall financial goal.

In order to be properly set for the financial path forward, there are a few initial organizational concepts that need to be accounted for first.

Understanding Your Monthly Income

Do you know the difference between net pay and gross pay? Net pay is the amount you take home AFTER pay roll deductions and tax with holdings have been made. Gross pay is the amount that is shown BEFORE tax deductions like state tax, federal tax and social security.

The number to be aware of is your net pay. As the amount of money you are actually taking home is known and acknowledged, you can create a budget from a true dollar amount and track accurate financial habits.

Understanding and Cutting Your Spending Habits

Are you aware of any habits that add a burden to your wallet? When it comes to finding where you can save money, coffee is a common expense people adjust first. You don’t have to cut coffee completely, but you can easily save by making coffee from home. Purchasing coffee from your favorite café is costly compared to a home brewed pot which could even save you time, eliminate transportation costs and reduce the cost of coffee itself.

Gym passes are also a typical expense that could be adjusted to aggressively save. There may be a numerous amount of reasons for a gym pass, yet there is an equal amount of alternatives that could be implemented in order to save. Switching to a home workout and using online videos and blogs can provide structure to your workout all while saving again, on transportation costs, time and of course, gym fees.

These are both conceptual ideas that could translate to other aspects of monthly expenses, in order to start cutting your spending habits.

Understanding Your Saving Habits

Now that you understand your spending, you can focus on your savings habits and take advantage of different accounts that pay dividends at better rates than traditional big banks. Your typical savings account at a big bank does not offer the same interest rates as a credit union, so it’s often advised to open either a Share Certificate Account or Money Market Account to maximize your monthly savings through dividends.

Understanding How to Move Forward

Everyone’s financial situation is different and some situations require to pay debt down aggressively, with a small consistent stream going into savings. It is recommended to do both collectively even if the monthly deposited savings amount is small. As a member of SafeAmerica Credit Union you have numerous resources readily available to help keep you, financially on track. Being financially healthy is a goal in and of itself and allows the path to financial milestones to present themselves. Keeping to strict saving and spending habits allows you to keep debt down and reach your financial goals.

Learn how you can use a Share Certificate to your advantage as well as the liquidity of a Money Market below.

Share Certificates
Money Market

• By Kevin Alvarez

Financial Tools for Success – Financial Literacy Month

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

April is Financial Literacy Month –  a good time to consider the importance of financial literacy education, especially with the economic uncertainties caused by the ongoing pandemic. Continuing our series of blogs sharing information as part of Financial Literacy Month, the focus today is on finding the right financial tools for success – whether the resources help us with budgeting, setting financial goals, or managing credit card debt, loans, or other debt.

Check out these financial tools to begin understanding options to figure out your finances.

Financial Calculators

A healthy financial future begins with an understanding of a person’s current situation. Online financial calculators help people run the numbers and answer questions related to financing their home or comparing how a debt management plan can help manage credit card debt.

Financial Wellness Resources

Being able to make healthy financial choices is about having good information at your fingertips. Much of that education is available online, but it’s important to tap into trusted resources. As an example, as a national nonprofit, GreenPath makes available a library of resources including worksheets, guides, educational on-demand webinars about managing finances, online learning experiences to help set a simple spending plan or prioritize expenses, and other educational tools.

Financial Counseling and Debt Management

Teaming with a trusted financial counseling agency gets the right information to help people make the best decisions about their future.

As a national nonprofit, GreenPath Financial Wellness provides free one on one financial advising with certified counselors. You’ll improve your financial literacy education with credit card debt counseling, debt management plans, student loan counseling, housing counseling, foreclosure mitigation, and debt management counseling

Based on a person’s full financial picture, people will understand how to pay down debt, steps to rebuild credit history, tips to create a savings strategy or other specific information to move forward.

As your financial institution, we proudly provide our members with insight through financial education and resources that may be of benefit. Through this, we can equip our members with knowledge to assist with helping to prevent financial stress, especially during when its most unpredictable.

Below is a list of available resources SafeAmerica Credit Union has for members:

Calculators

Here you can learn and calculate:

  • What your loan payments would be
  • What your auto payments would be
  • Should you refinance your auto loan at a lower rate
  • How long it would take to to pay off your credit card(s)
  • Should you transfer your credit balances to a lower rate with us
  • How much could you borrow from your home equity (HELOC)
  • Should you refinance your mortgage
  • Understanding your possible mortgage payment
  • How much would you need for retirement
  • how much should you save to reach your financial goal
Rates and Fees

Here you can stay up to date with our current rates for:

  • Savings
  • Checking
  • Credit & Personal
  • IRAs
  • Auto
  • Home
  • Fees
Educational Videos

Through our How-To Videos you will understand the following:

  • What is a Credit Union
  • How to enroll in Online Banking
  • How to use Our Mobile App
  • How to use Mobile Deposit
  • How to use mobile wallet
  • How to make a payment

Learn about online security through our How-To videos:

  • Getting back your stolen identity
  • Simple Tips for Secure Mobile Banking
  • Protect your Account through Strong Passwords
  • Wi-Fi Network Access Scams
  • What is Multifactor Authentication?
  • Protect Yourself from Phishing Attacks
  • Protect Yourself from Vishing Attacks
  • Protect Yourself from Gift Card Scams
  • Warning! Fake Cashier's Checks
  • How did a Virus Get on My Computer
Blog

Read our blog for continuous financial learning and updates:

  • Financial Literacy for Kids
  • 5 Factors That Affect Your Credit Score
  • What is a balance transfer
  • What is a Debt Management Plan

Our blog is constantly being updated on a monthly basis, so make sure to check back often!

We have also partnered with GreenPath Financial Wellness to provide exclusive and free financial education and counseling.

Learn more about GreenPath by clicking below.

Learn More