Archive for Credit

Money and Mental Health

For many people, the mere mention of the word “money” spurs feelings of stress and anxiousness. In fact, a Bankrate study of nearly 2,500 U.S. adults found that 70% of respondents feel stressed about their finances.  At the same time, living a financially responsible life can help one maintain optimal mental health. In observation of May being Mental Health Awareness Month, let’s take a look at the connection between money and mental health.

How do financial struggles impact mental health?

There are lots of ways money troubles can influence one’s mental health:

  • Stress and anxiety. Financial struggles are one of the leading causes of stress and anxiety. Feeling stressed and anxious can also impact a person’s physical health, often leading to insomnia, headaches, weight gain/loss and other physical symptoms.
  • Depression. Money struggles can also lead to depression, which can cause a person to lose interest in activities they once enjoyed and affect their ability to function in daily life.
  • Strained relationships. Financial issues are famously a primary cause of divorce, but it doesn’t end there. Money issues can put a strain on many other relationships as well, including those between parents and children, siblings, friends and more.

It is essential to recognize the signs of financial stress and take steps to manage it. Seeking support from friends, family or a mental health professional can help alleviate some of the stress and anxiety associated with financial struggles.

How does financial stability impact mental health?

Now, let’s explore how financial stability can impact one’s mental health:

  • Peace of mind. A stable financial reality can provide a sense of security and peace of mind, reducing stress and anxiety.
  • Increased opportunities. Living a financially responsible life can provide a person with the opportunities to pursue their interests and passions, such as travel, hobbies and new learning experiences, all of which can improve overall mental health and well-being.
  • Improved relationships. Financial stability can also improve relationships, reducing stress and tension associated with financial struggles.

It’s important to aim for financial stability to improve your overall mental health and well-being. This can involve taking steps to save money, reduce expenses and invest in a financially secure  future.

The link between money and self-worth

Unfortunately, too many people link their self-worth to their financial situation. This can lead to feelings of inadequacy and low self-esteem when experiencing financial struggles. However, it is essential to recognize that self-worth is not tied to financial success. Instead, focus on developing yourself as a person in ways that are not related to your financial situation. Set personal goals, practice self-care and seek fulfillment in areas outside financial success.

Debt and mental health

Debt is often the most significant financial problem that people face, and it can have a strong impact on mental health. Research shows that people who are in debt are more likely to experience mental health problems like anxiety, depression and even suicidal thoughts.

People who’ve been caught in the debt cycle may feel like they are trapped in their situation with no way out. This can lead to feelings of hopelessness and despair. Debt can also cause a great deal of stress, which can lead to physical health problems such as high blood pressure and heart disease.

If you are struggling to escape from under a mountain of debt, there are steps you can take to kick your debt for good. Consider consolidating it through an unsecured personal loan that may include one low-interest, and possibly lower, debt payment each month. You can also pay off one debt at a time by maximizing your monthly payment toward that debt until it’s paid off, which is often called the “snowball method” of debt payoff. If you choose this route, be sure to continue making all your minimal monthly payments on your other debts as you focus on the one.

Managing your finances for improved mental health

Are you struggling with money challenges that are negatively impacting your mental health? Here are ways you can improve your financial and mental health:

  • Create a budget and stick to it.
  • Trim your discretionary spending for extra breathing room in your budget.
  • Seek support from a financial counselor or therapist.
  • Practice stress-reducing activities such as meditation, yoga or exercise.
  • Avoid using credit cards or taking out loans unless absolutely necessary.
  • Set realistic financial goals and work toward them.
  • Focus on personal achievements and growth unrelated to your financial worth.

Money is intimately connected with one’s mental health. By managing your finances and seeking help when needed, you can improve your mental health and overall well-being.

Meet with 1 of Our 8 Financial Counselors!

Resources: 
https://www.mind.org.uk
https://www.moneyandmentalhealth.org/
https://www.cnbc.com

 

How to Avoid Credit Card Fraud this Holiday Season

With the holiday shopping season heading into its final frenzied stretch, scammers are out in full force to take advantage of busy shoppers. In particular, credit card fraud is rampant during this time of year. With most purchases paid for with plastic, scammers have their pick of vulnerable prey before the holidays. Stay safe this season and protect yourself and your cards from fraud with these safety measures and preventative tips: 

Choose zero liability 

If you can, choose a credit card with zero liability protection. This way, you won’t be responsible for any unauthorized charges made on your card. 

Monitor your credit

Stay alert and learn about the first signs of fraud to your credit accounts by reviewing your credit card statements carefully. It’s also a good idea to enroll in available alerts so you are notified of unusual and/or large purchases made on your card, and transactions made in remote or obscure places. Most credit card issuers offer instant text or email alerts, which helps cardholders to be alerted to fraudulent activity so they can take action before it happens again. 

Strengthen your passwords

Take some time out during this busy season to review the passwords on your accounts. Does each account have its own unique password? Are your passwords strong, using a combination of letters, numbers and symbols as well as varied capitalization use? If any passwords use your personal information, such as your date of birth, your hometown or your mother’s maiden name, change them. Easily cracked passwords like these can be used to hack into multiple accounts and can even lead to identity theft. Keep your passwords strong, and change them from time to time to prevent fraud. 

Shop with caution

Be an alert shopper this holiday season to avoid falling victim to credit card fraud. Only shop reputable sites and avoid clicking on pop-up ads or links in emails coming from unverified senders. To confirm a site’s security, look for the lock icon before the URL and the “s” after the “http.” Finally, make sure you are using a device that’s using updated security settings and choose a VPN (virtual private network) if you must use public Wi-Fi. 

Be wary of “support staff” calls from your credit card issuer

Some scammers resort to phishing calls for pulling off credit card fraud before the holidays. In these scams, a target will receive a phone call from someone who allegedly represents their credit card company or financial institution. The “support staff member” will tell the target there’s been an issue with their account and that it needs to be updated before the card can be used again. The caller will then ask the cardholder to share sensitive information, such as their card numbers, account details, passwords and more. Unfortunately, if the cardholder complies, they will be playing directly into the hands of a scammer. 

If you receive a phone call like the one described above, hang up and block the number. You can reach out to your card issuer on your own to check if there really is a problem with your account; but chances are, everything will be in proper order. 

Keep your cards close

Don’t forget to take basic precautions with your credit card this season, especially if you’ll be hitting a lot of shops before the holidays. Keep your card tucked into your wallet or purse. If you use a cardholder on your phone case, keep your phone in a safe place and make sure the card numbers are not visible to passersby. Finally, put your card away immediately after completing a purchase. 

Take immediate action if there are signs of fraud

If you suspect your credit card has been stolen or hacked, alert your credit card issuer and financial institution immediately. Your old card will be canceled to prevent the scammer from making additional charges and you’ll be issued a new one so you can complete your shopping. Consider placing a credit freeze on your accounts as well, which will make it nearly impossible for the fraudster to open new accounts or take out loans in your name. 

Stay aware this holiday season, and keep your money and your information safe!

RESOURCES:
https://www.chase.com/personal/credit-cards/education/basics/how-to-stop-credit-card-fraud-during-the-holidays
https://www.cnbc.com/select/how-to-prevent-credit-card-fraud-this-holiday-season/#:~:text=Holiday%20shopping%20is%20in%20full,credit%20card%20to%20purchase%20gifts.&text=While%20there’s%20the%20potential%20for,be%20charged%20for%20fraudulent%20charges.
https://moneyfit.org/blog/holiday-credit-card-fraud-guide

How to Dispute A Credit Report Error

Quick-what’s your credit score?

As a financially responsible individual, you should be checking your credit on a regular basis. You can do this by signing up for free credit monitoring on a reputable website like CreditKarma.com, requesting your annual complimentary credit report from AnnualCreditReport.com and reviewing your monthly credit card statements.

If all goes well, your report will hold no surprises and your score will be in excellent shape, or steadily increasing. Sometimes, though, you may find an error in your report. It might be a sharp decline in your score when you know you haven’t changed your spending or bill-paying habits, a large transaction you’re sure you’ve never made or an unfamiliar line of credit. While it can be disconcerting to find a mistake in your credit report, the good news is you can contest errors like these and fix your score.

Mistakes you may find on your credit report

Woman looking at bill with a concerned look on her face

Credit report errors are quite common. In fact, 26% of participants in a study by the Federal Trade Commission found at least one error on their credit reports that brought down their score. A lower score can mean getting hit with higher interest rates on loans, and can prove to be an obstacle when applying for a new line of credit or a large loan.

Most of these errors can be traced back to clerical mistakes, though some are caused by a lack of action on your part, or by criminal activity.

Credit report errors include the following:

  • You’re mistakenly identified as someone with a name similar to yours.
  • A credit account was never included in your report, weakening your perceived credit worthiness.
  • Your loan or credit card payments were applied to the wrong account.
  • A legitimate credit account or debt has been reported and recorded multiple times.
  • Your name is still linked to your ex-partner’s accounts and debts.

Identity thieves have used your name and credit file to open accounts and take out loans you knew nothing about – and it’s unlikely they have been making payments on those loans.

To avoid credit report errors, make sure to use your legal name on every line of credit you open, to remove your name from any accounts you are no longer associated with and to have all of your creditors report your open accounts to the major credit bureaus. As mentioned above, it is also crucial that you monitor your score to find mistakes as quickly as possible.

3 steps to disputing an error

If you’ve spotted an error on your credit report, don’t panic. Follow these three steps to dispute the error and fix your credit:

Step 1: File a dispute with each of the major credit bureaus.

You’ll need to inform all three major credit bureaus, Equifax, TransUnion and Experian, about the error. All three bureaus allow you to file disputes online.

In your written dispute, you’ll need to clearly identify each disputed item in your report, explain why you are disputing these items and ask that the errors be deleted or corrected. Include your full contact information, as well as copies of any documents that support your claim. You can also include a copy of your credit report, highlighting the items you are disputing.

To file your dispute online, follow these links for each of the three major credit bureaus: Equifax, TransUnion, Experian.

You can also file your disputes by mail to Equifax and TransUnion; Experian currently accepts online disputes only. If filing by mail, it’s best to send your letter via certified mail with a requested return receipt. It’s also a good idea to keep a copy of your correspondence for your own records.

Mail your Equifax dispute to the following address:

Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30348

Mail your TransUnion dispute to the following address:

TransUnion LLC
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016

Step 2: Contact the creditor

After you’ve contacted each bureau, you can also reach out to the creditor that’s linked to the error in your report. This step isn’t necessary, but it may speed up the correction process.

Most creditors will provide a link or an address for disputes. When filing your dispute, follow the guidelines above and include all relevant information and documentation. Be sure to let the creditor know you’ve also contacted the credit bureaus, as they’ll want to include this information and a copy of your dispute if they report their findings to the bureaus. You can also ask to be copied on all correspondences between the creditor and the bureaus.

Step 3: Follow up in 30 days

Expect to be contacted by the bureaus and the creditor within 30 days after filing your disputes. If all goes well, your dispute will be accepted, and your credit will be restored. In many states, you are eligible to receive a complimentary credit report following a registered dispute.

If one of the credit bureaus or a creditor refuses to accept your dispute or does not resolve the error in your favor, you can ask the bureau or creditor to include a copy of your dispute in your file and in all future credit reports. This way, a lender or creditor will be made aware of the alleged error when reviewing your credit. You may be charged a small fee for this service, but it is generally worth the price. If you feel the error is too significant to ignore, consider hiring a lawyer to help you contest the report and fix your credit.

Disputing an error on your credit report is fairly simple. Always monitor your score and be vigilant about correcting errors. The payoff can affect your financial wellness for years to come.

Speak with a 705 Financial Representative about Getting Your Credit Where You Want It To Be in 2020!

Can I Trust Credit Karma?

Q: I’m trying to increase my credit score ahead of applying for a large loan, so I’m considering signing up for Credit Karma to track my score. How accurate are the credit scores it shares? Is there anything I need to be aware of before signing up for this service?

A: Credit Karma is a legitimate company; however, for a variety of reasons, its scores may vary greatly from the number your lender will share with you when it checks your credit.

We have answers to all your questions about Credit Karma.

What is Credit Karma?

Credit Karma LogoCredit Karma is an online credit service that operates under the principle that everyone is entitled to a free and honest credit score. To that end, the site allows you to check your credit whenever you’d like without paying any fees-a privilege that can cost you about $20 a month from its competitors. You’ll need to sign up for the service and share some sensitive information, like your Social Security number and your financial goals, but you won’t be asked for any credit card numbers or account information.

Scores are updated once a week, and the company only performs a “soft inquiry” on your credit to get the necessary information.This means your score is never impacted by it checking your credit on your behalf. Credit Karma also offers lots of credit advice, customizable loan calculators and reviews on financial products of all kinds.

Credit Karma earns its profit through targeted ads. As you learn your way around the site and start to frequent it more often, you’ll see ads that are geared toward your specific financial situation. For example, if your credit is excellent and you’re looking for a home loan, you’ll probably find loads of ads from mortgage companies. While this may seem like a breach of privacy, it’s no different than the way much larger online platforms you likely use, including Google and Facebook, earn a profit.

How does Credit Karma calculate my score?

The online credit company uses information from two of the three major credit reporting agencies, TransUnion and Equifax, to give you a VantageScore 3.0. While this type of credit score is gaining popularity among lenders, you may not recognize it-and for good reason. The FICO scoring model is by far the most widely used credit score among financial institutions and lenders across the country, with 90% of lenders using this score to net potential borrowers.

The atypical scoring model used by Credit Karma, coupled with the absence of information from Experian, the third of the three major credit reporting agencies, tends to make Credit Karma scores differ from scores pulled by other companies and financial institutions. The credit service is usually within range and a good indicator of your overall credit wellness. You can also get a report with a thin credit history through this model, which is super-helpful for those seeking to build their credit from nothing.

How do other lenders calculate my score?

Most financial institutions use a FICO scoring model to measure consumers’ credit scores. As mentioned, this number will likely be lower than the score you see on Credit Karma, but will fall within the same general range.

It’s also important to note that, each time you apply for a specific kind of loan with an individualized lender, it will likely also use its own customized formula. For example, if you were applying for a mortgage with a home loan company, it would probably use a score that is specifically developed for mortgage loans. Similarly, if you were to apply for a car loan from an auto lender, it will use its own score designed to predict the likelihood of you defaulting on an auto loan. This can result in an even lower credit score from these lenders.

Is there any other way to get my credit score?

If you’re looking for a more relevant credit score, you have several options. You can ask a potential lender to pull your credit, though this might cost you both in fees and in a knock to your credit for the hard inquiry. You can order your free credit report with information from all three credit bureaus once a year, at AnnualCreditReport.com. Lastly, for more frequent monitoring, you can sign up for access to your FICO score and 3-bureau credit report on Experian.com, where packages start at $19.99 a month. There are other similar services out there, but most are not legitimate or are grossly overpriced.

How does Section 705 decide if I’m eligible for a loan?

We use the FICO model to calculate your credit score when you apply for a large loan. While this number will likely differ from your Credit Karma score, it gives us a broader picture of your credit as it includes information pulled from all three credit bureaus. We’ll also review your full financial history and trajectory to determine if you are eligible for the loan.

Here at Section 705, our goal is to help you achieve and maintain financial wellness. Consequently, we are far more likely to approve a loan for one of our members than a random lender who doesn’t know the first thing about you or your financial history.

If you’re trying to increase your credit score before applying for a large loan, we can help! Stop by Section 705 today to speak to a financial counselor about steps you can take to improve your credit.

If you’re ready to take out that loan, make Section 705 your first stop! Our stress-free application process, low interest rates and reasonable terms make us the best choice for your next large loan. We’ll help turn your dream home or car into a reality.

Sources:

https://www.investopedia.com/articles/personal-finance/103015/are-credit-karma-scores-real-and-accurate.asp
https://www.moneyunder30.com/credit-karma
https://www.creditkarma.com/question/credit-karma-score-is-way-higher-than-experian-score-why-is-that/
https://www.thebalance.com/why-the-lender-s-credit-score-may-differ-from-yours-960525

The Dos And Don’ts Of Credit Repair

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Starting the Credit Repair Process

If you’ve recently been rejected from a loan application of any kind, you may be looking at a poor credit score for any number of reasons. You might have been late with your credit card payments, have an outstanding judgment against you or have even been victimized by identity theft. This is just the article to begin credit repair step-by-step.
 
Whatever the cause of the fall in your score, you’re probably looking for ways to get it back on track. Tread carefully! There are lots of dishonest opportunists looking to make a quick buck off your pressing need. Don’t become the next victim of a credit repair scam. In fact, there’s nothing a credit repair company can do for you that you can’t do yourself.
 
This probably has you wondering how to untangle the legitimate steps you should be taking now from the pointless and costly actions. Look no further! Our handy guide of credit repair dos and don’ts will help get you on the road to improving your credit score.

Do: Determine your actual credit score

If a recent credit application of yours has been denied, don’t take it at face value – find out why it happened. The three major credit reporting agencies – Equifax, Experian, and TransUnion – are each required to provide you with a complimentary copy of your credit report once a year, upon request. To order yours, visit annualcreditreport.com, or call 1-877-322-8228.
 
If you’ve already requested a report from each of the agencies in the last 12 months, you can still get one free of charge; you are entitled to a free report whenever a company takes adverse action against you, such as denying your application for credit, insurance or employment. To qualify, just request a report within 60 days of receiving notice of the action.

Do: Review your report and dispute any errors

Once you receive your report, review it for inaccuracies. If you spot any fraudulent purchases or erroneous information, you’ll need to dispute them in writing. In your letter, identify every item you are disputing and the reasoning behind your claim. Include copies of documents that support your stance and ask that the errors be removed or corrected. It’s best to send your letter by certified mail so you can ensure the credit reporting company actually received it if that is necessary. Also, keep a personal copy of your letter and all supporting documents for your own records.
 
You’ll also need to dispute the charge with your actual creditor, taking the same steps you did above.

Don’t: Expect any quick fixes

Anxious as you may be to improve your score, know that there is no “quick fix” for creditworthiness. Enhancing your score takes time, lots of hard work and creating and sticking to a realistic debt repayment plan.
 
If your credit score is poor, you may be bombarded with promotional material from credit repair companies that promise to increase your score by 100 points in less than a month. If you think these claims sound too good to be true, you’re absolutely right. There are some legitimate credit repair companies out there, but as mentioned, there’s nothing they can do for you that you can’t do on your own – and without paying their hefty fee.

Do: Take steps toward fixing your credit

If you’ve determined that your credit report is accurate, you’ll want to take a careful look at the habits that may be leading to your unfavorable score.
Are you timely with your credit card payments? If you’re consistently late, consider setting up an automatic bill-pay system so you never forget to make a payment. Are you making headway on your debt? If you’re paying your bills on time but your debt is not going anywhere, it’s time to rethink your spending habits. Don’t shop with credit cards; use only debit or cash. Look for ways to trim your expenses, like couponing wherever possible, planning dinner menus around sale items, and finding cost-free ways to relax instead of blowing money at a restaurant or on retail therapy.
 
Are your monthly bills unmanageable? If you can’t make it through the month and still meet all of your minimum payments, your debt may need an overhaul. Consider debt consolidation, in which your debt is transferred to one low-interest account, or a balance transfer to a card that has an interest-free period. Be aware, though, that lots of open credit is not considered favorable by creditors; close as many accounts as you open – but leave your oldest one open as it shows a longer period of credibility.
 
Also, no card is interest-free forever. When the introductory period ends, you may be hit with higher than usual interest rates. Alternatively, you can contact your creditors and work out a more reasonable payment plan.
 
If these options don’t sound feasible, try finding ways to increase your income instead, using all extra cash exclusively for paying down your debt.
 

Don’t: Expect to see any changes immediately

Don’t fret if you’ve made strides toward fixing your credit and haven’t yet seen an increase in your score. Creditors will only report to the credit reporting agencies on a periodic basis, usually once a month. It may take upward of 30 days or more for your account to be updated and your score to improve.

Do: Ask us for help

Here at 705 FCU, we’re all about helping you manage your finances. If you’re in financial trouble of any kind, we can help! Stop by today to ask about our credit counseling services and assistance with creating and sticking to a budget. [We even offer debt consolidation loans, providing you with the opportunity to transfer your debt to one low-interest loan, making the prospect of paying down your debt a lot more manageable. Email a loan officer to learn more!]
 

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HOLIDAY BRANCH CLOSURE: 705 FCU will be closed in observance of Juneteenth on Wednesday, June 19, 2024. Contact us with any financial needs between now and then!