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Knowledge Bank: Managing Your Money

Your Credit Score
What Is It and What Does It Mean?

Credit is one of those things that can seem great at first, but it can quickly get out of control if you are unsure how to manage it. The biggest misconception about credit is that it is a bad thing and you should have none. Without credit, you would have a hard time renting a car when your car is in the shop or getting a hotel room when your vehicle breaks down. Good credit allows you to buy the vehicle you need and the house you want. Instead of running away from credit, it is smarter to develop good credit habits early and use those habits to enhance your financial life.

The primary factors in determining your credit score are:
  • Whether or not you pay your bills on time and in full each month. This affects approximately 35 percent of your credit score.
  • The ratio of your outstanding debt to your income. This will comprise approximately 30 percent of your credit score.
  • How long you have had a credit history. This affects approximately 15 percent of your credit score.
  • The types of credit accounts you are currently using and how often you use those accounts. This will impact approximately 10 percent of your credit score.
  • The frequency with which inquiries are made against your credit profile and the number of new accounts added to your profile in a short period of time. This will also impact approximately 10 percent of your credit score.

FICO scores range from 300 to 850. Here is what they mean to a lender:
  • Excellent: Over 750
  • Very Good: 720 or more
  • Good: 660 to 720
  • Needs work: 600 to 660
  • Poor: Less than 620
Organizations and individuals who will make decisions based on your credit score include:
  • Credit card companies
  • Auto dealers
  • Mortgage bankers
  • Insurance companies
  • Landlords
  • Employers
Here are some tips for managing your credit:
  • Keep track of your spending. Keep track of the checks you've written, debit and credit card transactions, and ATM card usage. Review your monthly statements when they arrive and report any possible discrepancies immediately.
  • Don't exceed your credit limit on lines of credit and credit cards. Your available credit is how much credit you have left on a line of credit or credit card; it is your credit limit minus your outstanding balance. Be careful to keep your spending below this amount. Following the “20/10 Rule,” it is a good practice not to let your credit card debt exceed more than 20% of your total yearly income after taxes. And each month, don't have more than 10% of your monthly take-home pay in credit card payments.
  • Have an emergency fund. Keep at least a 15% cushion of available credit in case of emergency. Or better yet, keep an emergency savings fund of three to six months' living expenses in a liquid, interest bearing account. That way, if you lose your job or have a big unexpected expense, you don't have to borrow more than you're comfortable repaying.
  • Pay what you owe. Always pay at least your minimum monthly payment on time every month. By paying more than the minimum – or better yet the full balance each month, you will reduce your finance charges. Be sure not to skip any payments.
  • Make timely payments. Timely payment is one of the best ways to establish yourself as a good credit risk to future lenders.
  • Be organized. Put all your bills in one place so you don't lose them or forget about them. Keep a list of the bills you have due, and if it will make it easier for you to remember to pay them, make them due on the same day each month. (Contact your lender to see if you can change your payment due date.)
  • Pay attention to the payment due dates. Mail your payment — or schedule an online payment through Bill Pay — at least a week before the due date. 
  • Sign up for automatic payments. Using automatic loan payments from your checking account is a simple, convenient way to regularly make your payments. Be sure to schedule them according to your pay schedule to ensure you have enough funds for the payment when it is drafted.
  • Keep your contact information current. If you're moving, remember to fill out the change of address form on your statement or update it online to ensure that your statement goes to your new address.
  • Stay in touch with your creditors. Contact your lenders immediately if you fall behind on your payments. Most creditors are willing to set up alternative payment options, especially if you inform them right away of your situation.
As always, please contact us with any questions or concerns.
Are you gearing up for an international trip this season? If so, you’ve likely started to plan and set a budget for your trip. You might have also started to think about how you’ll pay for purchases abroad, how to get the best exchange rate, and how to avoid foreign transaction fees or, even worse, fraud or theft. Read on for tips regarding how to save money during your trip and how to keep your money safe when traveling internationally.

Notify your credit card company and/or bank that you are traveling out of the country. Tell them the countries in which you’ll be traveling and the dates of your travel to avoid card suspensions or fraud alerts. Otherwise your cards may not work overseas!

Use a credit card for large purchases.
  • Major worldwide credit networks will automatically provide you with the best exchange rate.
  • Most credit card companies won’t hold you accountable for unauthorized charges if a card is lost or stolen.
  • Consider getting a no-foreign-transaction-fee card to avoid extra charges
  • Be aware that foreign fees apply to purchases made through foreign-based companies, whether you are outside the U.S. or not.
Bring a backup card….just in case!
Even if your bank has cleared your card for use overseas, you never know what might happen in a foreign country. Keep a backup credit or debit card separate from your main card in case your card is lost or stolen.

Pay credit card purchases in local currency.
When given the option of paying credit or debit card purchases in the local currency or U.S. currency, always choose the local currency to avoid unfavorable exchange rates.

Consider bringing some foreign currency with you.
You’ll avoid having to find an ATM as soon as you arrive and paying non-network ATM fees.

Avoid carrying many cards or large amounts of cash.
Secure your backup card(s) and extra cash in the hotel safe and don’t carry more cash than necessary – carry only what you need for the day.

Use public transportation when possible.
  • Buses, trains, and other forms of public transportation will likely cost less than taxis or ride-share services.
  • Many cities offer multi-day public transportation passes, which will save you money if you plan to use public transportation frequently.
Track your expenses
Use a smartphone app or spreadsheet to keep track of your purchases and stay within your budget. Doing so will also help you detect any fraudulent purchase with your credit or debit card.

Review your purchases and statements for accuracy after you return.
  • Review your credit and/or debit card statements during and/or after your trip. 
  • Notify your credit card company or bank immediately of any unauthorized charges.
Have fun and travel safely!
As always, please contact us with any questions or concerns.
An overdraft happens when you don’t have enough money in your checking or savings account to cover a withdrawal or payment.
When this happens, the Bank has two options:
  • The Bank pays the check or transaction and then charges you a fee.*
  • The Bank returns the item. In this case the Institution for Savings does not charge you a fee. That transaction, or item, is returned and you may be charged a fee and/or late charges by the payee.
When you do not have enough money in your account to cover a transaction, we will evaluate your overdraft based on a variety of factors such as tenure, deposit frequency but primarily your overdraft history. The Bank pays overdrafts at our discretion and does not guarantee that we will always authorize and pay any type of transaction.

Strategies for Avoiding Overdraft Fees
Overdraft fees can put a dent in your budget. But there are a few strategies you can implement to help you prevent paying this potentially costly expense.
  • Sign up for online banking
    Signing up for online banking allows you to track and watch your checking and savings accounts closely. You can monitor money coming in and going out. The Bank strongly recommends this option which will also assist you in quickly identifying and mitigating account fraud.
  • Track your expenses
    You can track your expenses in many ways. You can track them online or by using a written check register to record all of your transactions. It’s a good idea to record all of your deposits and withdrawals. This will help you maintain a running account balance. Reviewing and balancing statements each month.
  • Set up balance and transaction alerts
    We offer the option to receive text, email and in app alerts for a debit/withdrawal over a specified amount or when account dips below a specific amount. By establishing account alerts, you’ll know when to transfer or deposit more money into your account to cover any upcoming transactions that could lead to a negative balance. This is also a great tool to assist you with identifying and mitigating account fraud.
  • Link your accounts
    You can link an eligible Institution for Savings account to authorize or pay your transactions for a small fee* in the event don't have enough available money in your checking account.
Paying an overdraft fee is a costly and often unnecessary expense. The best way to avoid them is to track your expenses and stay within a budget. Being proactive will not only help you prevent overdraft fees, it also will help you successfully manage your money.

*See our Fee Schedule for details.