7 “Not So Smart” Credit Tips

Posted on June 8, 2013 by VP of Marketing and Business Development Jessica

There’s a lot of advice floating around out there about how to manage your credit cards and other debts to maximize your credit score. The trouble is, not all this wisdom is created equal, and some tips intended to help your credit can actually have the opposite effect. Here are seven “not so smart” tips that you should steer away from.

1. Asking for a lower credit limit.

If you can’t control your spending, asking for a lower credit limit may indeed keep you out of trouble by simply capping how much you can borrow. But there’s also a risk to this approach. As MyFICO.com explains, 30% of your credit score is based on how much you owe. The formula looks at how much you owe as a percentage of how much available credit you have, otherwise known as your credit utilization ratio. So if you’re unable to pay off your debt, lowering your credit limit will increase your ratio — and damage your score. The impulse to impose external limits on your spending is understandable, and in some cases wise, but you’re better off focusing your energy on restraint.

2. Paying off an installment account early.

Paying off debt early might seem like a good way to improve your credit, but paying off an installment loan (like a car loan), too early can actually ding your score because it raises your utilization ratio. For instance, if you have a $10,000 car loan with a $5,000 balance that you pay off in one fell swoop, your debt load will drop by $5,000, but your available credit will drop by $10,000 once the account is closed.

This isn’t to say you shouldn’t pay off a debt early if you find yourself with a windfall on your hands. An earlier payoff can save you a bundle, but if you’re trying to raise your credit score – paying off a credit card sooner rather than an installment loan is the way to go.

3. Opening a bunch of cards at once.

Since your utilization ratio is so important, a lot of people think that getting as much available credit as possible — immediately — will do the trick. But it doesn’t work like this, unfortunately. “You can’t magically improve your utilization ratio by applying for a slew of cards in rapid succession because numerous inquiries and multiple brand new cards both can lower your score,” says Barry Paperno, credit expert at Credit.com. If you want more credit to improve your score, space out the process and be realistic about your situation; don’t take the hit to your score by applying for a card you know you probably won’t qualify for. (Financial institutions that aggregate credit card offers generally spell out what kind of credit score you need to obtain a particular card).

4. Settling a debt for less than you owe.

Negotiating with a lender and then settling the debt for less than you owe can be a smart move. But it can also hurt your credit if you do it the wrong way. You must get the lender or collections company to agree in writing to report the debt as “paid in full;” otherwise, it will be noted “settled for less than the balance.”

5. Using prepaid debit cards to rebuild your credit.

John Ulzheimer, president of consumer education at SmartCredit.com, says a lot of borrowers have the misconception that prepaid debit cards and credit cards are equally good credit building tools. They’re not. Prepaid cards “don’t do anything to help build or rebuild your credit and are not a viable long-term plastic solution,” he says. Although some prepaid card issuers say they help build credit, none currently report to the three major credit bureaus.

6. Never using your credit cards.

Some people approach credit like a poker game, with the mentality that you can’t lose money if you don’t play your cards. Although it’s always advisable to pay off your bill in full every month, not using credit cards at all can actually backfire when it comes to your credit score. If an issuer looks at your account and sees that there hasn’t been any activity for a while (how long varies, but more than a year is a good rule of thumb), they might close it. Losing that credit line hurts your utilization ratio, which can hurt your credit score. Try to charge a small amount regularly — maybe a recurring bill like a gym membership or airline tickets for your annual summer vacation — and paying it off every month.

7. Checking your credit daily.

Checking your credit score every day won’t hurt your score (when you request your score, it’s called a “soft pull,” which is different from the “hard pull” lenders conduct that does affect your score). But trying to parse why you gained or lost two points here or there will just give you heartburn and won’t give you any greater insight into how your score is calculated. Lenders generally report to credit bureaus every 30 days, so checking your score every day takes the focus off what really matters: how your longer-term financial habits affect your credit file.

Article Source: http://business.time.com/2013/05/06/7-smart-credit-tips-that-arent/#ixzz2SzgoxXjx

No Business Owner is an Island – Tips for Getting the Right Advice from the Get-Go

Posted on May 29, 2013 by Marketing Coordinator Nicole

Starting your own business is one of life’s most exciting and harrowing experiences. Good planning is essential to helping you stay on course and deal with unexpected hurdles. Research is the first step in the planning process and you don’t have to go it alone.

While you should be an expert on your industry, products and services, there is no way that you could be an expert on everything that running a successful business requires, particularly the financial, legal and tax requirements. You may waste precious resources – your time, energy and possibly money- in the long run trying to do things yourself that you are not qualified to do.

Outside experts can include bookkeepers/accountants, lawyers, web designers and business coaches. Too often, we think we have all the answers and are the only people who can really get things done. The reality is that we are in danger of stretching ourselves too thin, and can risk the potential success of our business by not utilizing outside expertise. Consider hiring on a consulting basis to keep costs low until your revenues start growing. Look to your industry for references – the ideal professionals are those who have specialized in yours.

Unless you are a numbers whiz or have a degree in accounting, it is advisable to get a professional to set up your accounting system. Each start-up is unique but generally most start ups can begin with a bookkeeper. The bookkeeper will help start you off with a good record keeping system, handle financial transactions, and produce financial statements. An accountant will cost more, especially if you plan to aggressively grow. To keep costs down, you can use an accountant for year-end tax planning; the right accountant will not only help you with tax returns, but also with longer term tax planning and networking.

Good legal advice is worth its weight in gold; bad advice can destroy your business. A good business lawyer will provide vital assistance in almost every aspect of your business, from basic zoning compliance, copyright and trademark advice, to formal business incorporation, lawsuits and liability.

Hire a web designer who can design both your logo and website. You want a website focused solely on your company that is easy to navigate and full of useful information. Before the designer gets started, think about exactly what you want someone to do and how they should feel logging onto your site.

Get a coach. Even if at first you don’t get a business coach to help you and guide you in your planning and operation, get someone who is objective and outside of your business whom you can rely on for nitty-gritty business advice and to hold you accountable for getting results. Another set of eyes can work wonders for how you operate both for you and your business. An outsider can also make sure you are getting the numbers you need both on the top line and the bottom line to survive.

Working with these professionals from the start will not only increase your business success factor, but also free you to thrive in doing what you do best – your business! Remember no successful business owner is an island; plan to utilize financial, legal, technical and marketing professionals from the beginning.

Have a question about business planning, products, or services? Contact Business Development or leave a comment below.

6 Smart Moves to Boost Your Credit Score

Posted on May 23, 2013 by VP of Marketing and Business Development Jessica

If you think your credit score doesn’t matter too much to you because you’re not planning on getting a mortgage or applying for a credit card anytime soon, think again. Credit scores affect more aspects of our lives than you may realize and that’s why it’s important to keep your score as high as possible.

Paying your bills on time and staying well below your credit limits are the best ways to build and maintain good credit. Together they account for more than half of your overall credit score.

A healthy payment history is the biggest contributor to your credit score, accounting for 35 percent of the total. Miss even a single deadline, and you could see your credit score drop as much as 100 points or more. To avoid those dreaded “overdue” notices and the credit blemishes they bring, set up automatic payments for any regular bills so that your lenders get the check on time, every single time.

Another 30 percent of your credit score is based on the amount of debt you carry, as measured against the amount of available credit you have — otherwise known as your credit utilization ratio. It’s a good idea to keep your outstanding balances to less than 25 percent of the money available to you to spend. If you are not able to pay down your balances ASAP, you can go at the problem from a different angle by calling your lenders and asking them to raise your credit limit.

1. Fix clerical errors.

Check your credit reports and correct errors. Of course, you want to make sure that everything is being accurately reported, from your current address to your closed accounts. (For more guidance on how to dispute an error on your credit report, look to this guide from the Federal Trade Commission). But you also want to check the details about what is being reported about your current accounts. For example, it can make a big difference to your score if your credit limit for a card is understated. Imagine that you owe $5,000 and your limit is $15,000. That means you owe 33 percent of your limit. If your credit limit is incorrectly listed as $8,000, though, it will look like you’ve borrowed 63 percent of your limit.

2. Get credit where it’s due.

When you fix errors or take actions that should boost your score, make sure that all three of the main credit-reporting agencies (Equifax, Experian, and TransUnion) know about it. By law, you can get a free copy of your credit report from each of them once a year — do so, in order to spot errors and find other score-boosting opportunities.

3. Ask nicely for a favor.

One thing few people think of is simply asking for what you want. In order to help you pay down your debt more quickly, you might ask your lender to lower your interest rate. If the lender refuses, see if you can find a lower-rate card and transfer your balance.

If you’ve got one or two glaring late payments on your credit record, you might ask your lender if they could be erased, in what’s called a “goodwill deletion.” And if you’re dealing with a collections agency over some debt, see whether they’ll delete it from your record if you pay it off. That can be well worth it.

4. Don’t delete your history.

If you’re planning on closing some of your accounts, think twice. It’s often a sensible thing to do to simplify your financial life, but closing an account can actually ding your credit score. One reason is that it actually reduces your available credit. Oddly enough, a host of seemingly sensible moves can hurt you — such as using just one card for most of your charges. Even if you prefer using a newer card, keep older accounts open and use them occasionally to keep them active. Over time, that will give you a longer history and help improve that part of the credit score calculation.

5. Don’t rush to build your record.

Opening multiple accounts in a short period of time may boost your available credit, but it sends the wrong message to potential creditors, as it makes you look desperate to get credit from any available source.

6. Prevent bad marks from being added to your report.

Here’s a valuable tip for anyone selling a home for less than they owe on it: What you’re looking at is called a short sale, and if you end up owing many thousands of dollars to your mortgage lender, you might want to get it in writing before the sale closes that the debt won’t go on your record. Ending up with a big balance owed can be a black mark on your record, reportedly as costly as a foreclosure.If a high credit score is important to you — and for most of us it should be — always consider how your financial actions will affect your score. For more information on credit scores, be sure to look at this guide from myFICO.com, which is the consumer division of the company that is responsible for the popular FICO credit score.

Article Source: http://www.dailyfinance.com/2013/04/08/how-to-boost-your-credit-score/#slide=5793242

What Kind of Home Buyer Are You?

Posted on May 3, 2013 by VP of Marketing and Business Development Jessica

You picked your neighborhood, know your price range and are ready to start shopping for a new home. But before you start your hunt, it’s important to identify what kind of buyer you are to avoid wasting time.

For many home buyers, school district, neighborhood and affordability dominate the decision-making process, but knowing your “buyer personality” will help define and focus your search.

For instance, if you want a move-in-ready home but never convey that to your realtor, you can waste time looking at fixer uppers. Or if you care about the environment, you may want to see only green homes, which could require a more specialized agent.

Personality #1: The Move-in-Ready Buyer

These are the home buyers who want to purchase a house that only requires them to move in their furniture and start decorating.

These buyers are not afraid to look at many properties to find the perfect home that won’t force them to roll up their sleeves for improvements or repairs.

Personality #2: The Minimalist Buyer

Minimalist buyers aren’t afraid to make changes to a home as long as they are minor. This type of buyer is drawn to homes that are structurally sound, but may need some new paint, updated curb appeal or other minor cosmetic changes.

Personality #3: The Fixer Upper Buyer

This group of buyers can see the potential of almost any home and aren’t afraid to buy a home needing renovations.

Sometimes these buyers are first-time buyers looking for a home to put their stamp on something and other times it’s a savvy buyer looking to make money off a property with a repairs and renovations. Either way, a fixer-upper buyer won’t think twice about remodeling the basement, bathroom or even the entire house.

Personality #4: The Life Timer Buyer

The recession has changed the way people view the home buying process, and many first-time home buyers aren’t looking for the starter home – they are seeking out a home they can stay in for 10, 20 or even 30 years.

These buyers tend to have young children, planning a family or have multiple generations living under one roof. They plan to buy a home and stay in it for the long haul.

Life-time buyers may not be at a certain life cycle when they purchase the home but have the ability to plan for the future and purchase accordingly.

Personality #5: The Eco-Warrior Buyer

For this type of buyer, going green isn’t a fad–it’s a lifestyle. The eco-warrior buyer is always looking for ways to conserve natural resources and wants to buy a home that is energy efficient and uses minimal water and electricity.

An eco-warrior also wants a home that is close to work, entertainment and groceries to reduce his/her carbon footprint. Since eco-warriors have very specific requirements whether its geo thermal heating or solar panels, they should go with a real estate agent that specializes in that area.

Figured out what type of buyer you are and ready to take the next step? Apply for a First Financial Mortgage today!*

You can also subscribe to our Mortgage rate text message service by texting “firstrate” to 866-956-9302, and receive instant notification when our mortgage rates change.**

*A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. Subject to credit approval. See Credit Union for details.

**Standard text messaging and data rates may apply.

Article Source: http://www.foxbusiness.com

5 Reasons to Shop at a Credit Union for Car Loans

Posted on May 2, 2013 by Marketing Coordinator Nicole

When you’re in the market for a new or used car, you’re probably thinking about financing the vehicle. While dealerships make their own financing programs sound especially attractive, it’s always a good idea to shop around for the best auto loan rates—starting with local credit unions, like First Financial.

Mike Schenck, Senior Economist for The Credit Union National Association, says there are several reasons why you’ll be better off choosing a credit union over a commercial bank. Here are five of them:

1. You have a better chance of having your loan approved. If you have mediocre credit or have had credit problems in the past, a credit union might be “more likely to listen to your story than a commercial bank,” says Schenck. If you’re worried you might get turned down for a car loan because of your credit history, consider approaching a credit union before you talk to a lender at a commercial bank. Even though the loan application process is the same and the underwriting process is similar, the credit union may make some adjustments that a commercial bank would not. Many credit unions are more inclined to listen to its members’ needs and unique situations—sometimes adjusting terms of a loan accordingly.

2. Lower rates. A five-year term is the most common loan term for a new or used car, and rates at a credit union are typically much lower than the average rate at a competitor bank. According to the latest report from the market research firm Informa, the average rate on a new car loan of $30,000 from a commercial bank is 4.16 percent, while the average rate on a new car loan for the same amount from a credit union is 2.82 percent; that’s more than a 1.3 percent difference and equates to a difference of $215 a year, or $1,100 over the life of the loan.

3. Personalized service. Credit unions are not-for-profit organizations and work to provide members with high-quality customer service. Since operations decisions are made by a group of volunteer board members—rather than a group of stockholders—members tend to have a more personable experience at a credit union. You can openly discuss your concerns about your loan, talk about flexible repayment options and review your financial situation with a dedicated professional. This can alleviate some of the pressure of applying and securing financing for your new or used vehicle and you can be more confident that the credit union is working with your best interests in mind.

4. Educational resources readily available. Schenck explains that almost all credit union branches have a dedicated education and resource center, where members can learn more about financing options and how to make the best decisions when assessing the value of their car purchase. If you’re a first-time car buyer and apprehensive about the loan process, you can turn to a credit union for unbiased answers. “The branch can show you how to calculate the real value of your car—not just what the dealership declares as the value of the vehicle— and make a better decision about the deal,” says Schenck.

5. Non-sales approach. Unlike commercial banks, which often grant their lenders bonuses or some type of compensation for the loans they get approved, credit unions work for their members and aren’t driven to sell you anything that equates to extra money in their pocket. All profits from members end up going back to them in the form of better rates on other financial products, such as savings accounts, and more flexible loan options. If you don’t like the pressure of working with lenders from a commercial bank, consider heading to a credit union for a less sales-oriented approach—and potentially rewards in the form of better financial products and services.

First Financial’s goal is to provide the highest level of quality products and personalized services while maintaining financial integrity and stability, thus enriching the quality of our members’ lifestyles. Apply for a new or used auto loan right online – it’s quick, easy and secure! For additional questions, feel free to call us at 732.312.1500, e-mail us at info@firstffcu.com or stop in to see at any one of our branches.

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Important Money Talks to Have with Your Spouse

Posted on April 30, 2013 by VP of Marketing and Business Development Jessica

When you say “yes” to tying the knot, you’re doing more than joining hearts and lives, you’re also joining finances. Gulp. For better or worse, if you don’t communicate openly about money matters and work as a team, your marriage can end up in hot water.

Whether you’re married or about to walk down the aisle, here are five money conversations you should have with your spouse:

1. Create your personal financial blueprint: Few newlyweds are fortunate enough to have significant assets to invest and plan for. But with a relatively blank financial slate, two people can chart their vision; make concrete goals, and together gain knowledge to create financial security going forward.

Initiate the discussion by throwing an acquaintance or neighbor under the proverbial bus: “Mark and Pam sure have beautiful cars/clothes/jewelry, etc. Kind of makes me think that they will be forced to work forever to keep up with the interest payments alone!” Newlyweds should seek to educate themselves on financial matters by attending area adult education courses (preferably free ones) and reading financial books (borrowed from the library). Saving and investing that first $10,000 will provide a calm far greater than any 10-day cruise ever could.

2. Before the stork arrives, create a will: A will is needed to name a guardian of your minor child. It is often this difficult decision that causes people to put off creating a will. Without a will, the court will have the final say as to who raises your child in the event of your death.

Initiate the discussion by asking your spouse for their opinion on choosing a guardian. Try not to react negatively if you disagree with his response: “Your mother? That is a lovely thought – she certainly did a fine job with you (psst…go for bonus points). Do you think though, that it might not be an imposition on her because of her health issues, etc.” If you hit an impasse, you can also suggest co-guardians.

3. How should we grow our savings?: Ideally, this endeavor becomes a hobby for you as well as a goal-oriented pursuit. Investigate the retirement planning options that your employer may offer. Don’t have that option? Sit with a knowledgeable financial professional who will discuss various investment class options with you.

The Investment and Retirement Center located at First Financial can do just that! If you would like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your retirement and investment goals, contact them at 732.312.1500.*

Initiate the discussion by saying something like, “We work hard for our money and I’d like to brainstorm with you and a financial advisor as to how we can make the most of it.”

4. Long term care planning: A slower than expected economic recovery coupled with increased life expectancies and ever-increasing costs of medical care has made relying on government funded long term care resources unrealistic.

Initiate the discussion by encouraging your spouse to sit down with a long term care insurance professional. What you are looking for here is a maximum daily benefit that coincides with the cost of care in your area. Don’t be seduced by the 5 percent inflation protection, because the actual cost of care increases approximately 12 percent per year.

5. Insure your estate planning: You’ve done your will, powers of attorney, and health care advance directives, but how can you be sure that your surviving spouse won’t remarry and potentially lose those assets in a subsequent divorce?

Initiate this conversation by pointing to a real life example, if possible: “Isn’t it tragic that Marvin (widower friend) disinherited his adult children in favor of his home care companion? Yes, dear, I know that you would never do this, but what if either one of us developed a dementia-related illness down the road? All bets are off at that point. Let’s at least sit down with an attorney and see what the options are (i.e. post-nuptial agreement or trust) before we make any decisions.”

Working together to discuss and come up with a plan for these important money related topics that is right for both of you, will be the key to a happy “financially communicative” marriage.

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are: