Did you know your credit score could be costing you thousands of dollars without you even realizing it?

I’m Alvaro and in this video I’m going to go over what makes up your credit score… what hurts it… how to improve it… and how it can affect your finances.

Let’s start with the basics.

What actually makes up your credit score?

A credit score is a number between 300-to-850… given to a borrower… that gives lenders an idea of how much they can trust a debt to be repaid.

It's used when you apply for a mortgage, car loan or credit card… but it goes much further beyond lending… which I’ll explain later.

There are five key factors that determine your score:

• Payment history
• Credit usage
• Credit age
• Mix of credit
• And hard inquiries.

Now…your “payment history” is the biggest factor… making up 40-percent of the score.

This measures your on-time payments and any late or unpaid payments… regardless of the amount.

One missed payment can take two years to recover from… but recent payments matter more than older ones.

Once a debt is paid off or negative information is reported… it can stay on your credit report for seven-to-ten years.

Next… we have “credit usage” which makes up 23-percent of your score.

It measures how much of your available credit you’re using. 

Most experts say to stay below 30-percent usage.  This means if you have nine-thousand dollars of credit available to you, try to use three thousand or less.

If you max out your credit lines… your score will likely drop.

The next factor is your “credit age.”

It is the average of all open credit lines you have… and makes up 21-percent of your credit score.

Closing out long-standing accounts… or opening too many new ones will lower your overall average which in turn… can lower your score.

Moving onto your “mix of credit.”

This affects 11-percent of your score… and is based on the type of credit lines you have open.

The two most common are installment and revolving credit.

Installment loans are like mortgages or car loans… where you have a set payment amount for a specific length of time before it’s paid off. Such as a twenty-year mortgage or a car loan for 48 months.

Revolving loans are like credit cards or lines of credit… where you can add debt at any time and there’s not a set payoff date.

Having a mix of installment and revolving credit types is better for your score.

The last factor which makes up five-percent of your score is “hard inquiries”.

A hard inquiry is when a creditor checks your credit report because you have applied for a new credit line. 

Each hard inquiry will negatively affect your score…  regardless whether you are approved or not.

There is also what’s known as a soft inquiry… which does not hurt your credit. 

A soft inquiry is often used by landlords, insurance companies or potential employers to review your credit report… without actually applying for credit.

Now, let’s do a quick recap of what makes up your score:

Payment history is 40-percent

Credit usage is 23-percent

Credit age is 21-percent

Mix of credit is 11-percent

And hard inquiries make up the last five-percent.

Now that we know what makes up your credit and some actions that can hurt it… let’s answer the question: How do you improve it?

If you are just starting out and need to establish credit… you can apply for a low-interest rate credit card through a credit union.

Use that for small purchases like groceries or gas… and pay it off each month.

This shows creditors that you can be trusted to not over-spend and make your payments on time.

Paying it off in full… also saves you money by limiting the amount of interest that accrues.

If you need to repair or improve your credit… look into free financial coaching.

Ascentra credit union offers coaching services at all nine branches…

This service is even offered in spanish.

Our coaches do a soft-inquiry on your credit… so it doesn’t affect your score… then walk through the report to create a custom action plan.

Our coaches can also help with budgeting, debt reduction, long-term financial planning and more.

You can also use credit monitoring tools like savvy-money on the Ascentra app.

It allows members to view their credit report… and shows them where they’re doing well, where they can improve… and how.  This free service to ascentra members, has so much more to offer beyond

Don’t pay for credit services… and be aware of the fine print… you never know, some of these service could sell your information to third-parties.

Annual-credit-report-dot-com allows you to pull a full report once a year from each of the three credit reporting agencies… Transunion, Equifax and Experian.

Make sure to check for any inaccuracies… and if you find any… report them to the relevant credit bureau so they can be removed and not counted against you.

Consolidation loans through your credit union can help you in a number of different ways.

Consolidation let’s you combine multiple loans and/or credit card payments into one… offering a lower interest rate… helping you build your credit and save money.

Consolidations improve your payment history because one payment is easier to keep track of and pay on time… rather than several due dates throughout the month.

It helps your mix of credit by moving revolving credit to installment credit… and improves your credit usage by freeing up the credit lines the debt is moved from.

But it’s important to not use those credit lines again and go further into debt… fight any urge to use them by not carrying them around in your purse or wallet…just be sure to keep them in a safe place in your home… and remember that closing them will hurt your credit usage and your credit age.

Improvements should show on your credit report within a month or so…
and remember… more recent positive changes are much more important than negative impacts from the past.  Let’s look at a timeline that gives us the appoximate credit weight for each year. Because what you have done lately - both good and bad, carries more weight. 

Here's the break it down….40-percent of your score is based on what you’ve done in the past year… 30-percent is based on the prior 13-to-24 months and 20-percent on the prior 25-36 months.

That means 90-percent of your score is graded off of the past three years.

There’s no instant-fix to repairing your credit score… but with a little patience and work, mixed with some guidance… you can do it. 

But why should you do it?

Improving your score can make a big difference on your finances. 

Let’s say you’re looking to rent an apartment and the landlord conducts checks credit.

They may offer it to the person with the higher score… giving you less options for housing.

When you apply for a loan… a good credit score not only helps determine if you get approved… but also what interest rate you’ll get.

The higher the score you have typically means you’ll pay less in interest.

For something expensive like a mortgage… that can mean the difference of tens-of-thousands of dollars… say you plan on buying a home for 250 thousand-dollars and a bank promoting a 5.75% interest rate says you can qualify, but since you are not in the top credit bracket, your interest rate will go up to 6.75%. 

This is refered to as a “loan level price adjustment” – a policy that many lenders use that raises your interest rate or charges more fees.  Side note: ascenta does not punish people with “loan level price adjustments” on fixed rate mortgages– if you qualify for a mortgage, you get the best rate. 

Now, one percent may not sound like a lot, until you do the math.  For this example we will use the online caculator that lets you compare two mortgages.  We will keep it simple and not include closing costs and fees, and real quickly we see for a 30 year loan, that one-percent rate bump will cost you over 58-thousand dollars in the life of the loan. 

Imagine saving about 160 dollars every month for 30 years!!

Now, low credit scores can also increase your auto insurance premiums by as much as double the cost.

Research shows drivers with lower credit scores statistically have a greater likelihood of filing claims… which leads to higher rates.

(https://www.allstate.com/resources/car-insurance/does-credit-score-affect-car-insurance)

Essentially…  having a good credit score helps save you money… but it can also help you earn money.

Some employers do a soft inquiry of your credit before offering you a position…

So if you don’t have good credit… you could be limiting your job opportunities and the pay that comes with them.

(https://money.cnn.com/2013/08/12/pf/bad-credit/)

While your score can impact your earning potential… it’s important to know that how much you earn does not affect your credit…

Here are other factors that do not affect your credit score. 

A debt-to-income ratio compares how much money is coming in to what’s going out towards paying debt… and is one of the most common misconceptions about credit score influence.

There are many people that make a lot of money and have bad credit… and people who don’t make much money… living paycheck-to-paycheck… but have great credit.

The length of time you’ve worked at an employer… or how long you’ve been living somewhere also have no impact on your score.

all of these things may impact whether you qualify for a loan or how much a lender will offer… but have no bearing on your credit score.

Remember… the areas you want to focus on are your:

• Payment history
• Credit usage
• Credit age
• Mix of credit
• And hard inquiries.

Put in some time… some work… and remember… improving your credit score isn’t about perfection… it’s about progress…

And if you’re not sure where to start… ask for help.

Ascentra Credit Union is here to support you with tools, coaching and personalized guidance to help you reach your goals.

Your credit journey is just that… a journey… so take the first step… and keep moving forward.

Hello everyone, I’m Alvaro and I’m going to help you understand what sets credit unions apart from banks.

While banks and credit unions offer a lot of the same products and services like savings and checking accounts, credit cards, and loans… that is about all they have in common. 

The differences between banks and credit unions are their:

• Business structures
• Ownership
• And last, but not least, the mission.

In this video, I’ll dive a little deeper into these three areas to help make sense of the credit union difference. 

The biggest contrast between credit unions and banks is in the not-for-profit structure of credit unions. 

Most businesses generate revenue for their owners, investors, or shareholders. 

The more money a business makes, the better it is for the people at the top… but that usually comes at the expense of their customers. 

Banks are no different.

Profits from the loans and services they provide go to their owners or shareholders. 

Churning out dividends on a regular basis is top priority.

That may be great for the investors … but not necessarily the best thing for consumers.

“If customer service takes a hit … or fees and costs go up for customers … so be it! All in the name of profits!”

Now don’t get me wrong … I believe banks have a place.

However, they also actively lobby to get rid of credit unions to not only eliminate “competitors” … but eliminate a mission-driven industry that, quite frankly, keeps them fair.

We have seen headlines time and time again, where some banks resort to questionable and downright illegal practices in their quest for bigger profits.

Now if you wondered why I did “air quotes” when I said “competitors” … it’s because in the United States, banks own an astonishing 91-percent of deposits compared to a mere eight-percent for credit unions. 

Credit unions are really not competitors and banks are currently enjoying record profits … so what would compel them to target credit unions?

One word: greed.

The for-profit banking model also affects whether they open branches in certain areas … or even keep open branches located in areas they consider no longer performing to their standards.

In fact, according to the FDIC … NCUA … and America’s Credit Unions … since 2012 banks have closed more than 20,222 branches, while credit unions have opened 562 branches.

This has a devastating effect on the people who lose those jobs … and on the communities that become financial deserts.

In contrast, the credit union model does not put profits over service.

Credit unions don’t squeeze profits out of the organization to pay investors.

The profits are pumped right back into the organization for the benefit of the members.

Credit union members get less fees and lower interest rates on loans … and higher returns on their savings products. 

Credit unions also regularly rank higher in overall satisfaction on average compared to banks. 

Two recent J.D. Power studies showed that credit unions scored 74-points higher than the average bank in satisfaction scores. 

Credit unions are popular with the average American who needs basic financial products… and even those seeking wealth building services.

That is why 142-million American consumers are credit union members. 

Credit unions are governed by a board of directors who are all members of the credit union … most of them are volunteers.

Board members are democratically elected by the membership to provide oversight and guidance on the general direction of the credit union. 

Any member can run for a board seat … regardless of how much money they have in their accounts.

So, if you’re not happy with the direction of your credit union, you can run to join the board or at the very least, vote for those who are keeping the organization accountable. 

This helps credit unions stay responsive to their communities and their members.  

Credit unions are also limited to serving members who have a common bond. 

A credit union’s “field of membership” determines who is eligible to become a member.

The restriction usually applies to people who:

• Live in a certain region…
• Work for a certain employer or industry sector…
• Or even if they are part of the military. 

For example, there are federal credit unions that provide membership for federal workers and their families … while smaller credit unions might just service a specific region or town.

You can think of them as “exclusive” … but just about every American can join a credit union.   

At Ascentra, our field of membership is open to people who live or work within 21 counties in Eastern Iowa and Western Illinois.

While some may see this as a limiting factor, credit unions consistently punch above weight when competing with large national banks by working together to help provide service to all their members in very unique ways.

Cooperation among cooperatives – this is actually one of the principles of cooperatives – which is exactly what credit unions are. 

Cooperatives are organizations that are owned and ran by their members to meet the common needs of the membership. 

Many credit unions partner with each other to allow their members to mutually benefit.

One example of that cooperative spirit is the shared branch network … a service that lets you have a membership at a credit union in Bettendorf, Iowa … but go to college on the other side of the country without worrying about having access to your accounts.

Shared branching allows members to walk into any one of over 56-hundred credit unions across the country to make withdrawals, transfers, or loan and mortgages payments.

If you’re a snowbird or maybe on spring break in Florida … Orlando credit union can do business for Ascentra members … and we can do the same for their members at our shared branches.

Credit unions also give back to their local communities.

As not-for-profits, credit unions have a tax-preferred status … which means we pay all taxes except for federal corporate income tax.

The tax savings and credit union profits are used to offer better rates and services to our members… and reinvest in the community by:

• Funding local programs
• Teaching financial wellness
• Partnering with charitable organizations
• Helping members going through hardships
• Volunteering… and more.

This has proven to be a great investment for taxpayers.

Many studies show high returns for millions of credit union members and the overall economy. 

For years… bank lobbyists have been trying to have credit unions’ tax status taken away … but that would not only affect credit unions … but the people we serve. 

It would cost our members more money … and hurt our ability to make a community impact … which is deeply engrained in why credit unions exist in the first place.

Our guiding philosophy is “people helping people.”

This has been the mission since day one!

Credit unions were born because people of modest means were turned away by banks … and being preyed upon by loan sharks.

They came together to lend each other money … to help each other grow and be successful.

They created cooperatives … the early credit unions.

Those issues are still happening today.

Many banks don’t offer small consumer loans or help people with lower credit scores … leaving them to turn to payday lenders or pawn shops. Credit unions step in to fill that gap.

Plenty of credit unions have a similar story. 

A group of people who had an employer, church, or organization in common and were fed up with unresponsive banks and took control of their finances. 

For Ascentra Credit Union, it began in 1950 with a group of union employees working at the Alcoa Davenport works plant. 

They organized and created Alcoa employees credit union … with some of the earliest loans being used to help buy coal to heat their homes … or help put a down payment on a house. 

Today, the credit union serves more than 40,000 members and manages more than 556-million dollars in assets.

It’s also grown to nine branches located in Bettendorf, Clinton, Davenport, and Muscatine, Iowa, and Moline, Illinois.

The efforts to help people going through hard financial times has also multiplied.  

At Ascentra, we partner with organizations to provide financial wellness for people of all walks of life.

We’ve even created a foundation to ensure that even in tough economic times, we are still able to give back. 

We don’t just write a donation check.

We foster relationships with area changemakers and organizations who align with our mission … those who amplify our beliefs of listening, caring and doing what’s right.

That goes beyond just helping people get a loan.

It’s the way we carry ourselves and how we help others in our community.

So, what’s the credit union difference?

It’s simple … credit unions work to improve our communities because we work for and are owned by the people in our communities.

We will continue to grow and evolve to meet the needs of our members … because the credit union difference is the core of everything that we do

What is a down payment? 

A down payment is the initial cash you put down when you are buying your home. It represents a percentage of the total purchase price, and the buyer will often take out a mortgage loan to finance the remainder.

With a larger down payment, the buyer needs to borrow less, monthly mortgage payments are lower, and less is paid in interest over the loan term.

At Ascentra, a fixed-rate home loan requires a minimum 5% down payment and a first-time homebuyer adjustable rate mortgage loan requires a 3% down payment.  To avoid paying private mortgage insurance, a down payment of 20% is needed. 

The down payment funds can come from a variety of sources.  Oftentimes, people use assets like savings or retirement accounts.  Additional sources for funds include gifts from family members, grants or secured borrowed funds.  

Help may also be available in the form of down payment assistance programs.  At Ascentra, we offer a $7500 first-time home buyer grant for qualifying individuals.*

All down payment funds require documentation.  We want to make the process as simple as we can.  We are here to guide you and make sure your home buying experience is as smooth as possible.

We are your mortgage experts.      

Should I refinance?

This is a very good question, especially if rates are low!

The general rule of thumb is that if you can save at least one point in interest (for example lowering it from 4% to 3%), you can definitely save money in interest.  And often times, you can lower your payment or even the term of the loan down from, say, 30 years to 15 or even 10.

But while that may be a general rule, the most important question is “What is YOUR goal?”  

Some reasons you might want to refinance are

• To save money each month with a lower payment.
• To pay off your loan sooner by shortening the term of the loan.
• To consolidate other debts into one easy monthly mortgage payment.
• To borrowing against your home’s equity to make improvements or upgrades to your home.

Or maybe you are just unhappy with your current lender because your loan is constantly moving from one investor to another.  That won’t happen at Ascentra because we service all of our loans locally.  So when you need assistance WE will be here to help.

At Ascentra, we are your mortgage experts.

What is Escrow? 

An escrow is essentially an account that holds funds for your annual taxes and homeowners insurance throughout the year.  With each monthly mortgage payment you make, money is held in an account by the lender, then those funds are used to make your annual property tax payments and home owners insurance payments on your behalf.

When you escrow the lender will add 1/12^th of your insurance premium and 1/12^th of your tax bill to your monthly payment, so the lender has enough set aside to pay the bills when they are due.

It is important to know that escrow accounts are regulated, and all lenders are required to follow the same rules.  If you are purchasing a home and have less than a 20% down payment or you have less than 20% equity when you refinance, lenders require you to escrow your taxes and insurance as a part of your monthly payment.  If you are putting down at least 20% or have at least 20% equity on a refinance, you have the choice if you want to pay your taxes and insurance on your own. At Ascentra we do not require you to escrow in this situation, it is entirely up to you.

Annually our escrow department will do an escrow analysis, which includes new insurance premiums, new tax rates, and a 2-month cushion that is allowed by the government. We then calculate your new monthly payment based on those factors. 

Your mortgage payment may go up or down year to year depending on changes to your property taxes or insurance rates. 

If your escrow comes up short for any reason, you have the option to pay any shortage or you can finance that amount out over the next 12 months of mortgage payments.

At Ascentra, we handle all of our loan servicing in house, so if you ever have any questions, we are here to help.  We are your mortgage experts.

What is PMI?

PMI is short for private mortgage insurance. PMI is insurance required on mortgage loans for borrowers in two specific situations.

If you don’t submit a 20% down payment when purchasing a home, PMI is required.

OR If you don’t have 20% equity in your home when you are refinancing, PMI is required.

PMI is not homeowners insurance. Private Mortgage Insurance actually protects the lender in the instance that you stop making payments on your loan. The cost of PMI is included in your monthly mortgage payment.

You can request to stop PMI once your reach 20% equity in your home.  These requests are evaluated based on your payment history.  PMI is automatically canceled once you reach 78% equity in your home.

It is always a good idea to read your mortgage statement and be aware of the amount of equity you have in your home, since stopping PMI can save you money each month.

Here at Ascentra, members receive letters annually letting them know the percentage of equity in their home. This makes it really easy to track when you can cancel your private mortgage insurance.

At Ascentra, we handle all mortgage servicing in-house.  So if you have questions, we are here for you.  We are your mortgage experts.

Hello Travis here from Ascentra, ready to show you how to enroll in Ascentra’s Digital Banking for your business, corporation, LLC, Partnership or Organization/Nonprofit.

Let’s get into it.

First, you will enroll by visiting ascentra.org and clicking “Enroll” next to the Digital Banking Login Button. 

You can also download the Ascentra Mobile App, launch it and click on the Enroll link on the login screen. All the steps you see will be the same whether you are using a desktop PC or on a mobile device.

After clicking Enroll, a Digital Banking Enrollment form will appear. You will need to click the Enroll Here link next to the words “corporation, LLC, Partnership or Organization/Nonprofit”.

Now you will just need to fill out the required information in the fields.  As you fill each section, a small Hint box will drop down showing how the information should be entered helping you through the process.

When you request a User ID, you may be notified that the User ID selected is not available or contains invalid characters.  User ID’s must be unique and cannot be duplicated.  The Hint box and alerts will guide you when choosing your very own unique User ID. 

When you have completed this page click “Submit Enrollment” at the bottom of the screen.  A message letting you know that it has been successfully submitted will appear.  Please allow up to two business days to process your request.

You will receive an email with instructions for completing enrollment from our Member Business Team.

You will now need to use the “Forgot Password” function on the website to reset your password. Go to Ascentra.org and click the “Login” button in the top right.  Then click the “forgot your password” link. Enter the user id you chose when setting up your account.

It is time to create your unique password. The box lists all the requirements for your password. If you choose a password that does not meet one or more of these requirements, you will receive an error message and need to try again. Once you have a password that meets all the requirements, press Submit to be directed to the Agreement and Disclosure page.

Once you have read through the agreement, click I Accept at the bottom of the page.

You can now choose whether or not to register your device. Registering will make the need for verification and Secure Access Codes less frequent.  If it is a personal device, you may want to register, but NEVER register a public access or shared device. That could create a major security risk for your accounts.

Hello Travis here from Ascentra, ready to show you how to enroll in Ascentra’s Digital Banking. 

It’s easy, so let’s get to it.

First, you will enroll by visiting ascentra.org and clicking “Enroll” next to the Digital Banking Login Button. 

You can also download the Ascentra Mobile App, launch it and click on the Enroll link on the login screen. All the steps you see will be the same whether you are using a desktop PC or on a mobile device.

After clicking Enroll, a Digital Banking Enrollment form will appear. All you need to do is fill out the required information.

As you fill each section, a small Hint box will drop down showing how the information should be entered helping you through the process.

When you request a User ID, you may be notified that the User ID selected is not available or contains invalid characters.  User ID’s must be unique and cannot be duplicated.  The Hint box and alerts will guide you when choosing your very own unique User ID.  Once the information submitted on the enrollment form meets all the guidelines, click Continue and you will receive a Congratulations message with your chosen User ID.

Next, you will need to verify your identity through one of the contact methods associated with your account. You can choose an automated phone call, text message or email. Enter the Secure Access Code that you receive via your chosen method and press submit.

Now you will need to complete your profile information. It should pre-populate your information based on your account.  Once you are done verifying or making any changes, press Submit Profile at the bottom.

It is time to create your unique password. The box lists all the requirements for your password. If you choose a password that does not meet one or more of these requirements, you will receive an error message and need to try again. Once you have a password that meets all the requirements, press Submit to be directed to the Agreement and Disclosure page.

Once you have read through the agreement, click I Accept at the bottom of the page.

You can now choose whether or not to register your device. Registering will make the need for verification and Secure Access Codes less frequent.  If it is a personal device, you may want to register, but NEVER register a public access or shared device. That could create a major security risk for your accounts.

That’s it! You’re now enrolled in Ascentra’s Digital Banking and have access to all of your personal accounts.

To learn more about all the features Ascentra’s Digital Banking has to offer visit ascentra.org/anywhere