How to Improve Your Credit Score

The most common financial advice people get is, “Save money for an emergency fund!” “Pay down your debt!”, or “Don’t spend more than you can afford!”. That’s all good advice, but there is one more thing – credit score.

Your credit score determines a lot of things like loan and credit card accessibility and low interest rates. Your score can also help determine your cell phone plan, utilities, premiums for auto loans, home owner’s insurance, securing a job, and securing an apartment.

Here are some common FAQ’s about credit score:

How does it work?

To calculate your credit score, a scoring formula is used. The scoring formula is obtained by the three credit bureaus (TransUnion, Equifax, and Experian) suppling information that creates a score. The Consumer Financial Protection Bureau (CFPB) says a credit score predicts how likely you are to pay back a loan on time. Some of the factors that can make up your credit score are:

  • Your bill-paying history
  • Your current unpaid debt
  • The number and type of loan accounts you have
  • How long your loan accounts have been open
  • How much of your available credit you are using
  • New applications for credit
  • Whether you have had a debt sent to collection, a foreclosure, or bankruptcy, and how long ago

What is good credit?

FICO (The Fair Isaac Corporation) uses a formula that rates your credit score. Bankrate says that the FICO formula collects information about several areas of your financial life. They have created a model that divides the credit score into five categories.

  • Poor Credit: 300-579
  • Fair Credit: 580-669
  • Good Credit: 670-739
  • Very Good Credit: 740-799
  • Excellent Credit: 800-850

A good credit score is 670 and higher. At a 740 score, you will experience some benefits of having a higher credit score. To learn more about credit score categories, go to https://www.bankrate.com/finance/credit/what-is-a-fico-score.aspx.

How to build your credit?

Adapt good habits!

  • Paying Bills on Time: This is crucial to growing your score. Over a third of your credit score is determined by your payment history. You need to pay your bills on time to avoid a negative mark on your credit score.
  • Credit Utilization: Credit utilization is how much of your available credit you are using. To have good credit, you need to keep your credit utilization below 30%. If you go above the 30%, you will need to pay it off quickly.
  • Credit History: Lenders want to know that you can manage your credit accounts responsibly over a long period of time. Bankrate says that your credit report only tracks active credit accounts. Closing your oldest account will shorten your credit history. To help build good credit, do not close old accounts.
  • Pay Balances: Paying your balances in full will help grow your score. If you do carry a balance, try to pay it down quickly.

What can a good credit score get you?

  • Significant Savings on Interest Rates on Big Loans
  • Better Terms on Loan Products
  • Better Credit Cards
  • Insurance Discounts
  • More Housing Options
  • Security Deposit Waivers on Utilities

Conclusion

The bottom line is that your credit score is very important because today’s economy runs on credit. If you follow these tips about your credit score, you can achieve good credit.

*Red Crown Credit Union is not a financial planner or advisor, and this blog gives general ideas on credit scores. Individual results may vary.

6 Tips to Save Money While on Vacation

It is safe to say we are all ready for a vacation! You might be dreaming of going to the beach, seeing a new city, or having a staycation. Whatever your dream vacation might be, we have six tips that will help you save money before and during this getaway.

Tip #1: Saving Early

Saving money might seem like a no-brainer, but people tend to forget. Start by opening a savings account. Next decide how much you can save on a regular basis and set up automatic transfers to your savings account. Finally, stay motived/excited by naming the savings account with the name of the vacation you’re going on.

Tip #2: Set a Budget

Creating a budget is based on an educated estimate – research is key. Start by researching flights, transportation, accommodations, food, and activities. The type of questions you should ask are:

  • How many times are you going to eat out?
  • What activities are on the top of your list?
  • Will you be shopping?
  • What area would you like to stay in?

These are basic questions to keep in mind when creating/researching a budget. Within each category, you can break down the expense more to help you create an overall and daily budget. Once a budget is final, you may want to add a little more cushion to the dollar amount to help you with any unforeseen expenses.

Tip #3: Flights

Flights can be expensive, but there are ways to make sure you do not overpay. First, plan your trip early. Depending on where you are going and what time, purchasing tickets in advance will help make them cheaper. Another factor to consider is that prices can be higher on certain days of the week or during tourism season. Be flexible with dates to avoid this. Second, look at different airlines and sites to help find the cheapest flight.

Tip #4: Accommodations

Finding a place to stay can be overwhelming. You do not want to overpay, but you want to be comfortable. An easy way to save money is by getting a hotel with just the basics or try renting an Airbnb.

Hotel 

Before booking a hotel, you will want to search for the best deals. It can be as simple as typing the hotel name into Google or using a site to compare prices. Please note, some sites may not include extra hotel expenses, so make sure you research.

Airbnb

One great thing about Airbnb is that it can be an inexpensive alternative to a hotel. It works well when you are traveling with friends or family because you can split the price. When searching for an Airbnb, make sure you are close to the activities you want to do to save money on transportation.

Another accommodation tip is to find a place that has a kitchen or an area to keep food. This will help cut down your food expense by not eating out so much.

Tip #5: Food

Food can be one of the best parts of traveling, but it can be expensive too. To save some money, limit the number of times you eat out. Go to the local grocery store and pick up snacks or items for breakfast or lunch. You can also eat where the locals eat. Typically, prices are cheaper at local spots compared to tourist locations. Another way to save on food is by not having alcoholic drinks. Drinks can be expensive. If you want to drink, limit the amount to help with cost.

Tip #6: Experiences

The worst part of going on vacation is the cost of tourist attractions. Check the community calendar for free events and find attractions with free days. Look for deals on Groupon, TripAdvisor, and other sites.

Conclusion

These tips will help you have a great and fun vacation without breaking the bank. Remember, saving early and researching is key to having a successful vacation.

*Red Crown Credit Union is not a financial planner or advisor, and this blog gives general ideas on how to save money. Individual results may vary.

COVID-19 Scams

During the pandemic, there have been new opportunities for criminals to commit fraud by attempting to take advantage of people through COVID-19 scams. Knowledge about these scams can help you avoid being victimized. Red Crown has made a list of tips to keep you alert about COVID-19 fraud.

Unemployment Benefits

One major scheme that criminals are doing is taking someone’s personal information and filing unemployment claims. They are targeting employed people. People learn about this scam when they receive a notice from the unemployment benefits office or their employer.

If this happens to you, the quicker you act on the issue, the better! Click HERE to learn more about how to protect your finances/credit from this scam.

Relief Check Scams

The IRS has said they will be distributing the third round of relief checks the same way they did for the first round. The IRS saw scams with the last round and want you to be aware of some red flags. Below is what the IRS will not do:

  • Claim you received an overpayment and ask you to return the money.
  • Send you a password to use online to access or verify your account.
  • Contact you by email or social media to gather personal information.

One important thing to remember is that the IRS will first contact you by mail. For more information, go to the IRS website.

Vaccine and Treatment Scams

Criminals are now selling fake COVID-19 test kits and unapproved treatments through phone calls, social media, and at your door. Two scams you should be aware of are COVID-19 Testing Schemes and COVID-19 Treatment Schemes.

  • COVID-19 Testing Schemes: The scammer will say you are required to take a COVID-19 test. They will try to get your health insurance and other personal information. Once they have your information, they will bill the health insurance plan for tests/procedures that you did not get. The scammer will then receive money off those fake bills.
  • COVID-19 Treatment Schemes: These scammers are selling fake cures, treatments, and vaccines. They will ask for your health insurance information and other personal information. Approved treatment will not be communicated to the public this way. When approved treatments become available, you will not hear about them through a phone call, email, or online advertisement.

Never give your personal/health information to someone you do not know or trust. You should only share your information with a trusted medical professional.

For more information, go to https://www.fbi.gov/news/pressrel/press-releases/fbi-warns-of-emerging-health-care-fraud-schemes-related-to-covid-19-pandemic.

Other COVID-19 Related Scams

Fraudsters have always used emails, phone calls, or in-person methods to scam people. Below is a list of cons being used to get your medical/personal information:

  • Scammers are imitating the IRS through phone calls, emails, social media, and texts.
  • Robocalls making fraud offers to sell respiratory masks and other medical equipment/devices.
  • Fake emails to your personal/business account that appear to come from a trusted source.
  • Creating a non-existent charitable organization that is trying to get your money/or personal information. Make sure you do your research before clicking on links to donate.

Conclusion

Criminals will continue to find new methods to exploit people through COVID-19 scams. Remember, do not give out your personal or bank information – stay alert. For more information, go to fbi.gov/coronavirus and the FTC at FTC.gov/coronavirus.

*Red Crown Credit Union is not a financial advisor. The FBI, Consumer FTC, and IRS websites were used for writing this blog. This blog gives general ideas on ways to stay alert for COVID-19 fraud. Individual results may vary.