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Consumer Information
 
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How Does Money Move Around?
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Protecting Yourself from Identity Theft
 
 

Understanding your Credit Score

What is a credit score?
A credit score is a number lenders use to help them decide: "If I give this person a loan or credit card, how likely is it I will get paid back on time?" A score is a snapshot of your credit risk picture at a particular point in time. The higher the score, the lower the risk to lenders. Scores are generated by statistical models using elements from your credit report, and sometimes from other sources, such as your credit application. However, scores are not stored as part of your credit history. Rather, scores are generated at the time a lender requests your credit report and then included with the report. Identity theft can also impact your score.

The five areas considered in the calculation of your credit score listed from most important to least important are:

Payment History
Capacity (Amount You Owe)
Length of Credit History
Types of Credit
New Credit

How scores are calculated
Designers of credit scoring models review a set of consumers - often over a million. The credit profiles of the consumers are examined to identify common variables they exhibited. The designers then build statistical models that assign weights to each variable, and these variables are combined to create a credit score.

Models for specific types of loans, such as auto or mortgage, more closely consider consumer payment statistics related to these loans. Model builders strive to identify the best set of variables from a consumer's past credit history that most effectively predict future credit behavior.

About 60 percent of people have credit scores of 700 and above. The best number to have is 720 or above. If your score is 720, there's really no need to try and raise it because lenders lump you in the same category as folks with a score of say 800 or 820. At 720, you are viewed as a safe risk and typically receive a loan without problem and at a low interest rate. However, if your number is below 700, it's definitely worth your time to try and pump it up.

Here is a typical credit score is determined:

  • 35 percent Payment History: Details regarding payments made on credit cards, retail charge cards, installment loans and mortgages play a part here. How timely have your payments been? How much do you owe? If you've made late payments, how recently did these payments occur? If you've got few or no late payments, your score will be improved. Also, recent late payments will hurt your score more than those made years in the past. Having a long history making of payments on time and no missed payments on all credit accounts is one of the most important items lenders look for.
  • 30 percent Amount Owed: About 30 percent of your score is impacted by the amounts you've got outstanding to creditors. Owing a lot on many accounts won't necessarily hurt your score. If you're at or near your limit on your credit cards and other "revolving credit" accounts, though, your score will be compromised. This measures the amount you owe relative to the total amount of credit available. Someone closer to maxing out all their credit limits is deemed to be a higher risk of late payments in the future and this can lower their credit score.
  • 15 percent Length of Credit History: In general, a credit report containing a list of accounts opened for a long time will help your credit score. The score considers your oldest account and the average age of all accounts. If you're just starting to build your credit history, there's not much you can do to improve your standing in this area over the short term.
  • 10 percent New Credit: Opening several new credit accounts in a short period of time can lower your credit score. Also multiple credit report inquiries can represent a greater risk, but this does NOT include any requests made by you, an employer or by a lender who does so when sending you an unsolicited, "pre-approved" credit offer. Also, to compensate for rate shopping, the score counts multiple inquiries in any 14-day period as just one inquiry.
  • 10 percent Types of Credit in Use: "Your mix of credit cards, retail accounts, finance company loans and mortgage loans is considered."

Simple Formula to Becoming Richer

What we should all know but don't really understand

If you never ever want to worry about money then you really must keep the following formula in mind whenever you make money and spend money. By following this formula, you will be richer tomorrow than you are today.

Income > Expenses = Money

As long as your general income is greater than the money that you spend then you are on the way to becoming richer.

Of course we all know that the more you save, the more money you will have in the end for various purposes (buying bigger and better things, or for bigger and better investments).

BUT, whatever you do please refrain from following the one sure formula for being poor and broke and unable to buy anything:

Expenses > Income = Debt


The Credit Union Difference is YOU

You Own the Place

Credit unions are owned by their members. It's just part of our structure. That means you call the shots. It means you have a say in how a major part of your life - your finances - are run. So rather than having to answer to corporate stockholders, we answer to our members. Just let us know how you'd like the furniture arranged, because after all, you own the place. 

We Were Built This Way. 
From day one, our bottom line has always been you. It's just how we were built. Credit unions are made up of people working together to achieve a better life for themselves and their community. They were organized to be not-for-profit cooperatives run by democratic principles - one member, one vote. It doesn't matter whether you have an account with $20 or $20,000. Your vote counts the same as every other member. And with a philosophy like that, it's really no wonder why people love their credit unions. 

Go On, Discover the Difference. 
The difference is you. If you're a member of a credit union, you've already discovered that. Way to go. If you're not, take a moment and check into the unique benefits we offer.

Lets Look at the Difference between Credit Unions and Banks

Credit Unions
Not - for profit
Financial Cooperative
Made up of members
Each member is an owner
Board of Directors are chosen by members
Banks
for profit
Commercial Business
Have "customers"
Stockholders are owners
Board of Directors are chosen
by stockholders
For more information visit http://www.lookoutforthelittleguy.org/ or click on the star.


How Does Money Move Around?

A weird thing about money is that every time you spend it, another person earns what you spent.

When you buy a juice box for 50 cents, you pay the storekeeper with the money you spent for it. You are the consumer; he is the producer. You spent; he earned.

Then, when the storekeeper wants to buy something for himself, he will spend your 50 cents. The storekeeper becomes the consumer. The person he buys from, the producer, will earn that 50 cents. This shows us how money keeps moving all the time.

The grand total of all the money spent and respent from what is made to be sold is our gross national product (GNP). It is a good measure of the wealth of our country.

If consumers stop spending, producers stop making things to be sold. The GNP gets smaller, and the country gets poorer.

If consumers start spending, producers begin making more things to be sold. The GNP gets larger, and the country gets richer.


Protecting Yourself from Identity Theft

Identity fraud happens when someone steals personal information such as your account number or Social Security number and then uses this information illegally to make withdrawals from your accounts or apply for credit in your name.

Take these precautions to protect your information:

  • Be cautious when providing personal information such as your Social Security number and account or credit card information over the telephone, in person or on the Internet. Don't give out this information unless you are sure with whom you are dealing.
  • Protect your Social Security number and the Social Security numbers of your children and other family members by not carrying them in your wallet.
  • Report lost or stolen checks, credit or debit cards immediately. LeTourneau Federal Credit Union will block payment on the check numbers or account numbers involved.
  • Limit the number of credit card pre-approved offers that you receive by removing your name from the marketing lists of the three credit reporting bureaus. Visit www.optoutprescreen.com or click on the star to remove your name from their lists now.
  • Store cancelled checks, new checks and account statements in a safe place.
  • Notify the credit union of suspicious phone inquiries such as those asking for account information to "verify a statement" or "award a prize."
  • Review your credit report at least once every year. Make sure all information is up-to-date and accurate.
  • Memorize your PIN (Personal Identification Number) and refrain from writing it, your Social Security number or credit card number on a check.
  • Tear up or shred any pre-approved credit offers to which you do not respond. Thieves can use these offers to assume your identity.
  • Keep mail secure. Don't mail bills or sensitive information from your home or unsecured mailboxes. Retrieve and review your mail promptly. Thieves may use the personal information contained in your mail to steal your identity.
  • If you do not receive your regular bills when expected, call the company to find out why.
  • Review your monthly account statements thoroughly. Investigate suspicious items immediately to head off any possible fraud before it occurs.
  • Do not carry your Social Security card, passport or birth certificate unless needed that day.

If you are a member of LeTourneau Federal Credit Union and you think you are victim of fraud, immediately contact us by calling 903-234-3480 so we can flag your account.

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