Credit Union Is It Right For You

Wednesday, December 19th, 2012

Credit Unions and banks share many of the same services. You can open saving accounts, checking accounts, get loans and do pretty much all the same things with both of them. So if they both offer all the same things, why does it matter which one you choose? While both credit unions and banks offer the same services, that does not necessarily mean they are equal. One may be better for you then the other.

So how do you figure out whether or not a Credit Union is it right for you? Well look into the pros and cons of both credit unions and banks and see which fits your situation better.

Pros:
1: A credit union is typically a non profit organization, whereas banks are a business like any other. What this means is that credit unions do not worry as much about making a profit as banks do. This translates into lower fees for you and better savings. Because of this, the interest rates and fees will almost always be better with a credit union.

2: Since credit unions are non profit organizations, if they make more money then they need to operate they will often pass that back to their customers, giving you a greater benefit if your credit union is doing well.

3: The dreaded overdraft fee is something we all have dealt with at one point or another. But with credit unions, their overdraft fees are ten to fifteen dollars cheaper than a bank’s overdraft fee. This difference is also shared in other fees such as late credit card payments.

Cons:

1: Finding out if a Credit Union is it right for you also requires you to look into the cons as well as the pros, and one of the major cons is that using ATMs can cost a fair bit. Credit unions may have lower payments on other aspects, but they often charge high fees for using an ATM. If you are someone who uses an ATM regularly, then these fees may negate any benefit you get from using a credit union.

2: The requirements to open an account at a bank are typically quite low, in most cases they only require you to be above a certain age. And even then that is often bypassed by having a guardian co-sign with you. Credit unions are often far more strict, having a variety of requirements you must meet in order to join. If you do not meet these requirements, it does not matter if a Credit Union is it right for you, you wont be able to use it.

3: Credit unions are not insured by the FDIC, also known as the Federal Deposit Insurance Corporation. This means that if something happened to your money, you would be out of luck. However some credit unions are insured by the National Credit Union Administration. So if you plan on using a credit union make sure to look into it and check to see if it is insured or not. You do not want to trust your money to someone who does not have insurance.

Borrow Money From A Credit Union

Tuesday, December 11th, 2012

The recession and all the financial problems people have endured have been forcing people all across the nation to look for alternative methods for saving money. The banks tend to be at the forefront of this movement, as people are fed up with the way they are run. The Bank of America has won numerous “rewards” for being the worst business in America, so it should come as no surprise why people are looking elsewhere.

This is why Credit Unions have been making a lot of headway in recent years. People looking to Borrow Money from a credit union rather than a bank can expect a lot better service. Why do they get better service? Simple, a credit union is a non profit organization that is essentially run by it’s members. Those with accounts at a credit union can vote on how it is run.

Credit unions are there to serve you as best as possible. Banks are normal businesses, they sell their service and they want to make as much of a profit as they can. But a credit union does not have to worry about that. They just need to make enough to continue running. In a lot of cases, a credit union will actually return money to it’s customers if it earns more than it needs.

So for those looking to Borrow Money from a credit union, you might ask how you join one? Well unfortunately, credit unions are a bit exclusive. You have to meet certain criteria to be allowed to have an account with one. Not all credit unions are the same, and if you even have one in your area, it’s requirements may not be the same as other credit unions.

If you have a union in your area, you should look into what kind of requirements they have to see if you are eligible for joining. The criteria for joining can be all sorts of things, from your credit history, age, how long you have lived in the area, what your job is. Since they can be so diverse it is important to look for yourself.

If you are eligible to join your local credit union, you still may be a bit wary. If a bank gets robbed and your money stolen, you will be reimbursed. There is no real risk in leaving your money in a bank. You should be happy to know that this sort of thing also carries over to credit unions. Unions are also insured so that your money will be reimbursed should anything happen.

However, it is important to do your research. Make sure the credit union actually is insured before giving up any of your money. The last thing you want is to fall into a scam.

When looking to Borrow Money from a credit union you can expect superior service and lower fees and rates than at traditional banks. While difficult to join with their various requirements, they are almost always a better option than the banks are and can end up saving you a lot of money.

Credit Score Agencies- The Three That Will Make Or Break

Thursday, November 15th, 2012

Credit Score Agencies- The Three That Will Make Or Break You

In the United States, there are three major credit score agencies, or credit reporting agencies; they are TransUnion, Equifax, and Experian. The three credit score agencies are responsible for gathering and providing information on individual consumers. Banks and other financial institutions, as well as landlords, utility companies, and even insurance agents, have come to rely heavily on the information that credit score agencies provide as a means to determine the creditworthiness of individuals. If you intend to ever purchase with credit, the credit score agencies are likely to have a direct influence on your lenders decision about whether or not to extend you credit and how much it will cost you to borrow money, i.e., what your interest rate will be.

Since the credit score agencies have a direct bearing on your financial life, it is important to make sure that you are careful to avoid behavior that will negatively affect your credit history, and it is equally important that you check your credit report periodically to ensure that the information is timely and accurate.

What types of transactions and credit information decreases your score? Having too much debt. The credit score agencies look at your income and how much debt you have; this is called your debt-to-income ratio, and if it is too much, your credit score will be lowered. Generally speaking, the credit score agencies and lenders like your total debt-to income to be no more than about thirty-six to thirty-eight percent. Even if you have been able to keep up with your payments and have made your payments on time, it is still considered important that sixty-two to sixty-four percent of your income is not involved in paying off loans.

What else decreases your credit score? Having late payments. If you have late payments reported to the credit score agencies, the natural conclusion is that you have difficulty meeting our monthly obligations. If that is the case, it just makes sense that lenders should be cautious about lending your more money.

What other information do the credit score agencies consider bad? Having a lot of account activity over a short period of time. If a lot of different companies are accessing your credit score at around the same time, it indicates that you are shopping around for credit and that you may be taking on too much debt. It is a red flag and can lower your credit rating. However, accessing your own credit report has no effect whatsoever on your credit score, so do not worry about that.

Do all three credit score agencies give you the same score? Not necessarily. Lenders realize this, so they generally use the average of all three scores. They may only use one agency, also, but that is usually not in your best interest, because what happens if they just happen to use the one that has incorrect data about you? Ever heard of Murphys Law? Usually, the reason for the different score is that not all three credit score agencies have the same data. Not every creditor reports everything to each agency. Check your report regularly and correct errors in a timely fashion; keeping a good credit rating in a harsh economy is tough enough without having mistakes in your file.