Learning about your credit score and what you can do to improve it will help you unlock your full credit potential and achieve your financial goals.

How your Credit Score is Calculated
Lenders and creditors with whom you have a loan, credit card or other credit account, report information about your credit activity to the credit bureaus. This includes details like the balance of your account, amount paid, amount due and the payment status.

Scoring agencies incorporate five factors into the scoring model including payment history, credit utilization, average age of accounts, types of credit in use and new credit.

The Top Factors that Impact Your Credit Score

1. Payment History

Your payment history is typically the most important factor in calculating your credit score because it shows lenders whether you’ve been reliable in making on-time payments. This is an indicator that you’re likely to pay back your debts in the future. Just one or two late payments could significantly hurt your credit score.

2. Credit Card Utilization

Credit utilization ratio, or debt-to-limit ratio, measures the amount of your overall credit card limit that you are using. You should aim to keep your credit utilization ratio below 30%, but the lower the better. A high credit utilization ratio can lower your credit score and can make potential lenders worry that you may not be able to handle more debt. Your credit card utilization ratio is calculated by dividing your total outstanding balances on all of your cards by your total credit limit.

3. Age of Credit & Established Credit History

Establishing a long credit history usually improves your credit score if you have a history of on-time payments on your open accounts. Factors also include how long all of your credit accounts have been open (the age of your oldest account, the age of your newest account and an average age of all your accounts), how long specific credit accounts have been open and how long it has been since you used each account.

4. Credit Mix and Number of Accounts in Use

The number and type of credit accounts that you have in use (credit cards, auto and student loans, mortgages and other lines of credit) all factor into your credit score. Having more open credit accounts can lead to a better credit score. In addition to the number of open accounts, having a diverse mix of credit across two main categories, revolving credit and installment loans, could also improve your credit score.

5. Hard Credit Inquiries and New Credit

Each time someone pulls your credit report, a lender, landlord or insurer, an inquiry is noted on your credit report. There are two types of credit inquiry, hard and soft inquiries and only hard inquiries are visible to others on your credit report and impact your credit score.

• Hard inquiries, typically only made with your permission, occur when a financial institution accesses your credit report when you apply for credit.
• Soft inquiries, sometime made without your permission, occur when someone accesses your credit report—but not because you are applying for new credit.

Lenders who see that you have many recent inquiries may worry that you are applying at several places because you’re unable to qualify for credit or may be desperate for money.

The Bottom Line
From getting a low-interest personal loan to consolidating your credit card debt to buying your first home, strong credit health can be empowering and help you achieve the financial goals you’ve set. Achieving good credit health begins with knowing your credit score and where you land on the credit score spectrum, understanding what’s in your credit report and learning what actions you can take to maintain or strengthen your credit health. Check your credit score regularly and review your credit report annually to take better control of your finances and reach your full credit potential. Visit www.allcomcu.org to apply for a loan or credit card today.

If you’re not good at maintaining a household budget, you’re not alone. Many families operate without a spending plan, and even those who think they are budgeting may not actually be doing so. The budgeting process involves more than simply recording receipts and taking stock of spending habits. The following are some crucial steps for making a family budget:

Bring Both Partners Together
Have a discussion with all decision-makers in the house to hash out shared and individual financial goals. Both partners need to understand and accept that compromise may be necessary to create a budget that works for the entire household.

Create Goals
Whether your budget succeeds or fails could depend largely on whether it aligns with your personal and family priorities. Decide together what is important to your household. That could be one parent staying home to raise children, an early retirement or extensive travel. If it’s realistic, create your budget so it will funnel money toward that goal.

Track Income and Expenses
Before you can write a budget, you need to understand your current financial situation. Begin by tracking or reviewing 60 days’ worth of transactions through your bank and credit card accounts. This will be crucial to identifying what money gets lost in your household’s “black hole”.

Evaluate Your Current Situation
As you track expenses, place them into categories that make sense, such as housing, entertainment, dining out and debt payments. Once you know how much you spend in each category, determine which expenses are fixed and which change throughout the year. It’s also helpful to identify which categories are discretionary, meaning they cover expenses that are nice but nonessential for your family.

Trim Costs
If spending in one category is too high or if there is no money left over for savings or debt repayment, it’s time to trim expenses. Dining out tends to be a drain on many budgets. Menu planning, shopping sales at the supermarket and buying items in bulk can all reduce the cost of groceries and make it more economical to eat at home. Cable, subscription services and impulse purchases made online are also low-hanging fruit when it comes to reducing household spending.

Build Savings
Savings should be a top priority for any money left over after monthly expenses are paid. While it may be tempting to focus on paying down debt first, an emergency fund is equally important. Keeping enough money in savings to cover three to six months of expenses is a common rule of thumb.

After an emergency fund, retirement is the next savings priority. Workplace 401(k) accounts and IRAs offer tax incentives, making them a good spot to deposit money for retirement. Many employers will match employee 401(k) contributions up to a certain percentage, and workers should contribute at least enough to their retirement plan to receive the entire match. AllCom offers its members retirement options as well. Click here to learn more about Traditional and Roth IRAs.

Get Out of Debt
Part of the budgeting process is balancing the need to pay off debt with the need to save for the future. While having an emergency fund is important, it may be best to shift your focus to debt repayment after that. If a debt charges higher interest than savings would yield, it may be better to pay down debt than boost savings beyond what is necessary.

Some debt, however, comes with tax advantages – Up to $2,500 worth of student loan interest can be deducted from federal income taxes, and mortgage interest can be included on itemized deductions.

Check in Frequently
Once completed, a budget should serve as a road map for how a family plans to spend its money going forward. To be effective, it should be consulted frequently to ensure actual household spending is in line with what is written. As family circumstances or priorities change, the budget can be adjusted.

It may be a pain to come up with a new password for each site and application you use, but having a strong password can mean all the difference in securing your account. In hopes of helping keep your accounts secure, this article includes a few helpful tips.

Often, advice about creating a strong password is pretty much the same: the longer the better; use a mix of letters, numbers and symbols to make it complex; avoid using personal information; and don’t use a word found in the dictionary.

Password complexity has typically been favored over length, but cyber criminals figured out that shorter passwords are easier to hack, even if a few letters are substituted by similar numbers or characters. The trick is to create a long and complex password that can withstand a variety of hacking attempts.

Strong Password Do’s

• Make It Memorable. Long, complex passwords are the most secure but they’re often hard to remember. Think of an easy-to-remember phrase or piece of information, and replace letters with similar characters or symbols. You could even take that phrase and make it an acronym before substituting symbols. For example, “I went to JFK High in 1975” can become “!WtJFKh1gh@I_75” or something similar.
• Use Different Passwords. If a hacker obtains your password, the first thing they’ll do is check whether that password works for other websites. It only takes one compromised login to put all of your other accounts with the same password at risk.
• Use a Password Manager. A password manager—like LastPass, Dashlane, – is an app that saves login credentials for different sites, then automatically logs you in the next time you visit. Some may also generate unique, complicated passwords.

Strong Password Don’ts

• Use Dictionary Words. Hackers can use a list of every word in the dictionary (or multiple dictionaries) to use against a password database. Luckily, strong passwords aren’t usually vulnerable to this kind of attack.
• Use Common Passwords. Common passwords and generic sequences like password, admin, 123456, qwerty, etc. are also discouraged because they’re easily hacked.
• Use Personal Information. It’s simple to remember names, phone numbers, birthdays, etc., but that kind of information is easy for a hacker to find using social media and other methods.
• Write It Down. If someone finds your password, they could do a number of things with your account. This is especially a problem with banking and email passwords.

If you travel with children, you may have found cheap family vacations more difficult to arrange in recent years. The price hikes for trips during school breaks are well documented but there’s also the steady upward trajectory of the costs of food, accommodation and entry fees to attractions. These quickly add up when you are travelling as a family.

Thankfully there are ways to make your hard-earned cash go further while you explore the world together. Here are some tips for planning a family vacation on a budget.

1. Timing is everything
Last-minute deals don’t typically exist during school holidays. If your kids are in school use the school calendar to book months or even years ahead, when prices are still relatively low due to the lack of demand. If your kids aren’t in school yet or you homeschool, make the most of travelling outside the peak periods, when costs are low and crowds fewer.

2. Use your parenting networks
Baby social media groups likely kept you sane through the newborn phase. Quiz fellow parents about trips they’ve taken, how much they cost and what they would do differently to save money next time. There are also plenty of forums and family travel bloggers ready and willing to give you their budget tips on destinations they have visited.

3. Take your family off the beaten track
The higher the demand, the higher the price. One solution? Get off the beaten track. Avoid tourist hotspots and choose instead for somewhere less trendy or famous; think rural Lazio over Tuscany, Adelaide over Sydney and Maine over California. With a bit of research, you’ll find fun things to do with the kids and enjoy the luxury of a place that isn’t overcrowded.

4. Turn the journey into an adventure
Save money on a night’s accommodation and create memories you will all treasure by travelling to your destination (or between two points on your itinerary) in a different way. Taking an overnight train or ferry is a huge event for kids and a story they will retell again and again when back home. Alternatively, a family road trip using your own vehicle avoids the high cost of air fares and rental cars.

5. Embrace the great outdoors
Kids tend to love spending time in the fresh air, which is great news for money conscious parents. Plan day trips that involve nature walks rather than expensive attractions, find a local playground so your little ones can meet other children. You can even take a picnic to avoid restaurant prices.

6. Stick to the essentials
Anyone trying to save money knows it’s those little extras that really add up and the same applies when you are travelling with kids. Take refillable water bottles, buy ice creams by the pack in a local supermarket and read up on the sites you are visiting before you go to avoid paying extra for audio guides, activity packs or special exhibitions. Having an ‘eyes only’ policy for gift shops can also help keep extra spending at bay.

7. Change your family’s travel habits
Instead of trying to get away every time the kids have a break from school, consider going less frequently but for longer, thereby consolidating costs of getting away in the first place. If you’re able to work remotely, you could travel for months, rather than weeks. Alternatively, consider a ‘staycation’. Switching off and pretending you are on holiday while exploring your local area can be a fun family challenge.

No matter which vacation options you choose, AllCom Credit Union can help. For a limited time, apply for a Special Vacation Loan of up to $5,000 with rates as low as 6.00% APR* for 12 months. Click here to learn more.

*Annual Percentage Rate. Best rate available based on creditworthiness. Payroll Deduction or Automation Payment required. 12 month maximum term. Effective 6/15/2021-8/31/2021. Loan based on a payment of $86.08 per month per $1,000 borrowed for 12 months. Other rates and terms available. Not valid on existing AllCom loans. Rates and term subject to change without notice. Please contact a Loan Officer at 888-754-9980 for additional details.

Learn how to spend, save and invest your first job income while paying down debt.

When you’ve been living on a college budget, the first real paychecks from your post-graduation job can feel like more money than you know what to do with. Here’s how to spend, save and invest that income while paying down debt and splurging a bit, too.

1. Create a simple budget

A budget is certainly the first step. Once you budget and ensure you’re meeting essential needs, you can spend money on things or experiences you value – all while feeling confident that you can afford them.

The 50/30/20 approach is a good budget starting point.

• Spend 50% on needs like rent, groceries and minimum loan payments.
• Spend 30% on splurges like trips, takeout and concert tickets.
• Spend 20% on savings and extra payments on high-interest debt.

2. Make a money priority list

You can’t do everything at once when you’re saving money and repaying debt. Prioritize in this order:

• Save $500 for emergencies in a high-yield savings account.
• Contribute enough to your 401(k) to get your employer’s match, if there is one.
• Pay off any high-interest debt.
• Save for retirement. Aim for 15% of your pretax income.
• Expand your emergency fund. Aim for three to six months’ worth of expenses.

3. Understand investing basics

Buying individual stocks is one investment option, but is not often recommended for beginners.

Your first priority should be a retirement account like a 401(k) or Roth IRA, even as your career.

The money in these accounts is invested in stocks and bonds and grows over time due to compound interest. For example, every $1,000 invested at age 22 becomes nearly $20,000 when you are 72, assuming a 6% rate of return.

4. Take an inventory of student debt

While saving for the future is important, you’re also likely facing something else: student loans. Start dealing with them by answering these questions:

• Are the loans federal, private or a mix of both?
• How much do you owe?
• What are the loan interest rates?

Many student loans are owned by the Department of Education. To see your federal loan details, visit the Federal Student Aid website. For private student loans with a bank or credit union, check your account with that lender.

Most student loans have a six-month grace period. This means payments won’t come due until late fall. If you start making payments earlier, you’ll save on interest and establish the habit of paying.

If you have federal loans, you can also apply for an income-driven repayment plan that caps payments at 10% to 20% of your income and forgives the remaining balance after 20 or 25 years. Private student loans aren’t eligible.

5. Work on your credit

Can you name a benefit of student debt? It may seem difficult, but here’s one: Consistent on-time payments reflect well on your credit. A credit score in the high 600s or above is necessary to access the best rates on loans, insurance and a future mortgage. Some employers and landlords check credit, too. Review your credit report to see where you stand.

Buying a home can be an exciting and emotional process. Before starting your home search, you’ll want to understand the ins and outs of the homebuying process. This will empower you to make decisions that are the best for your family — and your wallet.

When shopping for a home, cost is a big factor. It helps to know the upfront and ongoing costs of homeownership and how they fit in with your other expenses. Upfront costs will likely include a down payment, closing costs and additional funds for various required inspections. Ongoing costs may include: mortgage payments, maintenance and repairs, utilities and homeowners association or condo fees.

The majority of buyers afford their home with the help of a mortgage. Your mortgage payment typically includes: principal (the amount you borrow), interest, property taxes and insurance. Along with your homeowner’s insurance, you generally pay Private Mortgage Insurance (PMI) until you have 20% equity in the home. PMI protects the lender if you stop making payments on your mortgage.

As you prepare to apply for a mortgage, you’ll want to first prequalification and preapproval. These may help  guide your home search and help you focus on homes you can afford. When the time comes, they can also help you decide how much to offer and show the seller that you’re a serious buyer.

A prequalification generally means that a lender, just like AllCom, collects some basic financial information from you to estimate how much house you can afford. It’s common for a prequalification to rely on self-reported information, instead of verifying by pulling your credit report or reviewing financial documents. This means a prequalification is typically a ballpark estimate.

As you begin searching for a home, real estate agents and sellers want to see you’ve been working with a mortgage lender so they know you can afford to buy a home. After you’ve been prequalified, you’ll usually receive a prequalification letter you can show to an agent or seller as proof you’re working with a lender. This is a good first step, but it typically won’t carry as much weight as a preapproval because a lender hasn’t yet verified your information. Going beyond a prequalification and getting preapproved is a critical step to showing you’re serious about buying a home.

For many people, the biggest obstacles to homeownership are low credit scores and paying off current debts.

To prepare for future homeownership, you should:

Improve your credit score
Check your credit report for free at  www.annualcreditreport.com and make sure it’s accurate. Make on-time payments for all bills and make at least the minimum payments on your debts (but the more you can allocate toward debt payments, the more quickly your credit score may improve over time).

Don’t get into further debt.
Examine your current spending and create a sensible budget. Pay down your debts to improve your debt-to-income ratio. Save up for a down payment and other up-front costs. Your debt-to-income ratio, or DTI, equals your monthly debt payments divided by your gross income and is expressed as a percentage. Lenders use this number to determine your ability to afford your debt payments.

Creating a “future homeowner” cash cushion
When you’re ready to buy a home, you’ll need a big cash cushion for the down payment, closing costs, and an emergency fund to cover unexpected home repairs. If you plan to pay property taxes separately from your mortgage, you’ll need enough cash to cover one or two lump sum tax payments per year as well.

When considering homeownership, be sure to think about your reasons for wanting to buy a home, your current and future lifestyle and your budget, available savings and current debts. While there are many benefits, homeownership is not for everyone at every stage of their life. By evaluating your specific needs,  you’ll be better able to identify an ideal time to buy a home.

AllCom Credit Union’s knowledgeable staff is ready to answer any questions regarding your home buying journey, now or in the future. Visit a branch, call 508.754.9980 or go to www.allcomcu.org/lending-solutions/mortgage for more information.

An expected refund or stimulus payment can inspire exciting plans for spending our new money. The COVID-19 pandemic was and is still stressful for many people, both financially and in other ways. It’s natural to want to reward ourselves using part or all of a tax refund or stimulus payment, which we may think of as extra money. Whether it’s your regular pay, a refund or a stimulus payment, you should be responsible with how you use that money.

A 2020 National Retail Federation® survey found that about 50 percent of those surveyed will likely to use their tax refund to contribute to savings. 34 percent were going to use the refund to pay down debt and 24 percent planned to use their refund for every day expenses. The smartest thing you can do with any extra income is use it for necessities, including increasing your savings and decreasing your debt.

Pay your bills
If your job was affected by the pandemic, the best thing you can do with any additional money is to stay current with your regular financial obligations, pay bills and pay down any additional debt you may have accumulated.

Add more to your savings or money market accounts—or invest in a CD
It’s always a good idea to add to your savings. Many people start building their financial resources with a basic savings account. Saving accounts earn interest and can be linked to include direct deposit of a paycheck or to a checking account. If you’d prefer a flexible account that can earn a higher rate of interest for your savings, look at a money market account.

A certificate of deposit (CD) is another way for you to watch your money grow at a higher interest rate than a savings account. When you open a CD, the money is invested for a fixed amount of time (fixed-term) and can be used once the certificate of deposit has matured—when the fixed-term has ended. CDs can be be invested for terms of 6, 12, 24, 36, 48 or 60-months.

Put money in an IRA or other retirement savings account
The additional funds you receive now can make a big difference in the future. If you use them to make an extra contribution to your Roth IRA or a traditional Individual Retirement Account (IRA), they could significantly increase by the time you retire. If you don’t already have an IRA, use your refund/commission/bonus to jump-start one. In 2021, the annual contribution limit for IRAs is $6,000 ($7,000 if you are 50 or older).

Build—or rebuild—a short-term emergency fund
Finance professionals typically recommend saving three to six months’ worth of living expenses in a separate emergency fund to protect against a financial setback such as an unexpected job loss or medical emergency. For many Americans, the pandemic demonstrated that it can be difficult to start or maintain an adequate short-term emergency fund. Using your stimulus payment, tax refund, commission or bonus payout to start or build up your savings is something you will be thankful for when you need it.

Pay off high-interest debt, such as high-interest credit card bills
One of the best ways to spend your tax refund is to eliminate credit card balances and other types of high-interest debt. Reducing high-cost debt not only relieves the stress of making monthly payments; it also enables you to save hundreds, or even thousands, of dollars. Another option for lowering your debt is to take out a car loan, personal loan, or a home equity line of credit and use the loan to pay off other debt that has a higher interest rate. You will then have more money available to pay off the new, lower-interest loan faster.

Help others
If you’re in a strong financial position, you may consider helping others with the additional money you’ve received. Maybe you can assist a family member or a friend in need or support a charitable organization. If the organization is tax-exempt, your contribution may be tax deductible.

Do something special for yourself
If you’ve eliminated high-interest debt and fully funded your savings and emergency accounts, you may want to indulge in a smaller, more personal reward. Treating yourself to a a nice takeout meal from a restaurant, some new clothes, rent a movie from a streaming service, buy music, a book, or videogame, or do something else that you would enjoy.

Debt consolidation combines multiple debts into a single payment. It can be a good idea if you qualify for a low enough interest rate.

Debt consolidation rolls multiple debts, typically high-interest debt such as credit card bills, into a single payment. Debt consolidation might be a good idea if you can get a lower interest rate. This will help reduce your total debt and reorganize it so you can pay it off faster.

If you’re dealing with a manageable amount of debt and just want to reorganize multiple bills with different interest rates, payments and due dates, debt consolidation is an approach you can tackle on your own.

How to consolidate your debt
There are two main ways to consolidate debt. Each combine your debt payments into one monthly bill.

• Get a low interest, balance-transfer credit card. Transfer all your debts onto this card. You will save money by having a lower interest rate. You will likely need good or excellent credit to qualify.
• Get a fixed-rate debt consolidation loan. Use the money from the loan to pay off your debt, then pay back the loan in installments over a set term. You can qualify for a loan if you have bad or fair credit (689 or below), but borrowers with higher scores will likely qualify for the lowest rates.

Two other ways to consolidate debt are taking out a home equity loan or 401(k) loan. However, these two options may include some risk to your home or your retirement. The best option for you depends on your credit score and profile, as well as your debt-to-income ratio.

When debt consolidation is a smart move
Having success with debt consolidation typically requires the following:

• Your total debt (excluding mortgage) doesn’t exceed 40% of your gross income.
• Your credit is good enough to qualify for a low-interest credit card or debt consolidation loan.
• Your cash flow consistently covers payments toward your debt.
• You have a plan to stay out of debt.

For many consumers, debt consolidation reveals a light at the end of the tunnel. If you are approved for a loan with a three-year term, you know it will be paid off in three years — assuming you make your payments on time and manage your spending. On the other hand, making only the minimum payment on credit cards would mean months or years before they’re paid off, as they accrue more interest than the initial principal.

When debt consolidation isn’t worth it
Consolidation isn’t a magic solution for debt problems. It won’t stop excessive spending that creates debt. If you’re overwhelmed by debt and have no hope of paying it off even with reduced payments, debt consolidation may not be the right solution for you.

If your debt amount is small and you can pay it off within six months to a year. You would likely save only an insignificant amount by consolidating. Try a DIY debt payoff method instead, such as the snowball method or debt avalanche.

AllCom Credit Union offers debt consolidation products to fit each member’s unique situation. Our low interest credit cards offer balance transfers with no transfer fees, saving you even more money. Prefer a fixed repayment plan? We also offer debt consolidation loans between $500 and $15,000 and with terms from 12 to 60 months. Apply today and receive your approval in as little as one hour. Have questions? Call 508.754.9980 to talk with a member service representative.

During the pandemic, we’re doing more online – working, connecting with family and friends, shopping, and banking. So, if something goes wrong with your device, you want to fix it right away. Scammers are preying on this, offering phony tech support services. Here’s what you should know about tech support scams.

How to spot tech support scams

Scammers take advantage of your reasonable concerns about viruses and other threats, but their real goal isn’t to protect your computer. Instead, they want to sell you useless services, steal your credit card number, or install malware, which lets them see everything on your computer.

How do you know if you’re being scammed? Here are three common scenarios:

Scenario #1: Unsolicited call from tech support

You get a call from someone who says he’s a computer technician. Maybe he claims to be from a well-known company. He says there are viruses or other malware on your computer to trick you into giving him remote access to your computer or buying software you don’t need. He may ask you to pay by gift card or wire transfer.

Scenario #2: Unknown pop-up appears on your screen

A pop-up window appears on your computer screen with a message warning of a security issue on your computer and tells you to call a phone number to get help. The person who answers may pretend to run a diagnostic test and claim to identify more problems.

Scenario #3: Unsolicited email about a suspended account

You get an email saying your account has been suspended. In a recent twist, scammers are sending emails saying your Zoom account has been suspended or you missed a meeting. If you click on the link, it will install malware allowing the scammers to see what’s on your computer.

How to avoid tech support scams

Here are four tips to protect against tech support scams:

• Never give control of your computer to someone who contacts you out of the blue. Criminals can spoof phone numbers, so you can’t rely on Caller ID. Avoid giving anyone you don’t know access to your computer, or your credit card information.
• Don’t click links in unsolicited pop-ups or emails. If an unknown pop-up appears on your screen, avoid clicking on any links. The same is true for unsolicited emails. Instead, navigate to the company’s site by typing in their URL.
• Maintain your anti-virus software. Use trusted anti-virus security software and make sure to update it regularly.
• Recognize legitimate tech companies. Legitimate companies won’t contact you by phone, email or text message to say there’s a problem with your computer. Security pop-up warnings from real tech companies won’t ask you to call a phone number.

Act quickly if you’ve been scammed

If you’ve been scammed and you paid by credit or debit card, contact your credit card company or bank to ask them to stop the transaction. If you paid with a gift card, immediately contact the company that issued the card , and tell them you paid a scammer and ask if they can refund your money.

You should also report any tech support scams to the Federal Trade Commission at reportfraud.ftc.gov .

For more information on fraud and scams, download the CFPB and FDIC’s Money Smart for Older Adults resource guide.

Article originally posted to the CFPB (Consumer Financial Protection Bureau) blog January 21, 2021.