Capacity & Your Credit Score
It seems no matter where you turn lately, you are hearing or reading something about the new Credit Card laws! With all of the changes being made, it didn't take the big credit card companies long to figure out that the cards that have been issued to their customers who aren't carrying balances are not going to make them any money. Now we are hearing that these big card issuers are starting to close the accounts of these customers.
Why is this important to you as a consumer? Your credit score is comprised of many different factors. These factors include things such as: how much credit you have had; what types of credit you have (mixture of installment loans like car loans, mortgages, etc & revolving accounts like credit cards & lines of credit); how you have handled your credit (have you charged up to your available limit on one of your card(s); have you made your payments on time); and how long you have had credit.
So, it got me to thinking...if some of the credit cards that I have had for a long time (but don't currently use) get closed on me, how is that going to affect my credit score? How will it affect my CAPACITY?
Here are 2 examples of capacity:
1) Let's say I have 6 credit cards open under my social security number and have had them all for 5+ years. The total available credit that I have is $50,000. I typically carry balances of less than $5,000 total. My available capacity is 90%. Change the typical balances that I carry to $10,000, capacity = 80%
2) Let's say that of those 5 cards, I have only really used 2 of them for the last 3 years and the companies decide to close the 3 that I haven't been using. Now my total available credit has shrunk to $20,000 and my typical balances are still $5,000. My available capacity is now 75%. Use this scenario with the typical balances that I carry at $10,000, capacity = 50%
Capacity affects a person's credit score. If you have used up all of your available credit, where would you turn to help you out in a true bind? A good rule of thumb to follow to help you create and maintain a good credit score is to keep your available capacity at no more than 70% ~ to help build a great credit score keep it under 90%!
If you are concerned or have questions about your capacity or your credit score, set up a time to talk to one of our Financial Service Representatives. They will help you analyze your credit report and educate you. Capacity is only one aspect of what makes up your credit score ~ look for more in the future!
Jill Berdan - Sleepy Eye Branch Manager
SouthPoint FCU earns 5 Star Rating from BauerFinancial
For the 18th straight year, SouthPoint Federal Credit Union, with branches in New Ulm, Sleepy Eye and Springfield, MN has received BauerFinanicals recommendation and highest rating of 5 Stars. BauerFinancial Inc., of Coral Gables, Florida, has been analyzing and reporting on the financial condition of the nation's banking industry since 1983. Through the years, BauerFinancial has earned the reputation of "the nation's bank rating service". Hundreds of newspapers depend on their ratings for their readers and federal and state regulators refer thousands of inquirers to Bauer each year.
Financial data is compiled for credit unions as reported to the National Credit Union Administration (NCUA), the governing body for credit unions. The star ratings classify each credit union based upon a complex formula which factors in relevant data including, but not limited to: capital, historical trends, loan delinquencies, differences in the book and market values of the investment portfolio, profitability, repossessed assets, reserves, charge-offs, regulatory compliance and asset quality.
SouthPoint was named to the Recommended Credit Union Report because of its superior five-star rating on a zero-to-five-star scale. The rating reflects that SouthPoint is a safe, financially sound credit union, operating well above their regulatory capital requirements. As a five-star institution on this report SouthPoint has demonstrated a capital to assets ratio of 9% or higher. Full reports are available at www.bauerfinancial.com.
SouthPoint Federal Credit Union was founded in 1936 and serves over 10,500 members in Brown, Redwood and Renville Counties of Minnesota. More information on products and services can be found at www.southpointfed.com or by contacting Troy Diedrich, VP of Marketing and Development at 507-233-5600.
Should I upgrade the operating system on my computer?
Information Technology (IT) is an exciting field to be in. I have always loved to play with new gadgets and take things apart and hopefully put back together using all the parts.
Many of us have an older computer that we use at home or at work. We sometimes think "it works so there is no need to get a new computer", well I happen to disagree with that theory and here is why.
At any given time all over the world, there are ill-intentioned people that spend an enormous amount of time attempting to break into home and business computer systems. If you have an old operating system that isn't being supported anymore this could leave you wide open to the risk of being attacked.
With always advancing computer technology, people do need to be concerned about the life span of their operating system. For example, as of January 31, 2009, Windows XP is no longer being sold. Windows XP patches for security problems are going to be available until April 2014. You might think 2014 is a long way away, but Windows XP did come out 8 years ago and that is a long time for a company to support a product that is no longer contributing to its bottom line.
Windows 7 is a great operating system! If you are a home user and you are looking at getting a new computer with this operating system, I think you will be very happy with it. Business users always seem to struggle with operating system upgrades with respect to the compatibility of proprietary software that they need to run their business. It is always wise to check with your software vendors to make sure the latest and greatest operating system is supported before you upgrade. Windows 7 does have some nice built in security features, but of course the best defense is to always be careful on the internet with your private information.
Scott Berbrich, Information Technology Specialist
Private Mortgage Insurance and the Purchase of My Home
We work with many members that are trying to purchase and finance their first home. In many cases these members have limited money for a down payment. When a member has a downpayment of less than 20% of the purchase price, we will generally require Private Mortgage Insurance (PMI) on that loan.
As a cooperative financial institution doing business in today's world, small downpayments mean more risk. We never enter into a new mortgage loan expecting a problem with the loan being repaid. Our loan staff is experienced in working through repayment issues so that our members are always treated with respect and our credit union is protected. PMI is a last resort protection for us as a lending institution. Broadly defined, it limits a mortgage lender's risk of loss in the event a foreclosure takes place on a transaction involving a small downpayment.
If PMI is required on a mortgage loan, the members' application must be underwritten and approved by a Mortgage Insurance company that we have contracted with. Approvals are based on application information, downpayment and employment verifications, appraisal, credit rating and other important aspects of the loan.
So, if you are thinking of purchasing a home with limited downpayment, give us a call. We pledge to give you answers to your questions and to make your mortgage experience very satisfying.
Michelle Strate, Mortgage Loan Officer
The Cost of Convenience
First, let's look at the option of Paying Inside. Once you have selected the "Pay Inside" button at the pump, you will be able to fuel up your vehicle, and after fueling up you will need to walk inside to see the convenience store attendant. The attendant will then swipe your card and give you a receipt for the amount owed. In this case the amount held on your account will be the actual amount of the purchase.
Let's not forget about the other option you have, Paying Outside. After swiping your card, the pump will then authorize your card. Once you have completed fueling up your vehicle a receipt will be printed for your transaction. What you are not going to see on your receipt is the temporary hold that is being placed on your funds. Some convenience stores have a sign stating the hold will be place on your account, others do not. The hold placed on your account is the result of the surge in gas prices earlier in the decade. Many people were filling up and driving off without paying. The hold is to ensure that the convenience stores will get the money for the transaction since you will not need to enter the store. The hold originally started at 50 dollars, but now has been raised to 75 dollars. This is very similar to the hold that is placed on your account when making hotel reservations. The money is temporarily held; you will only be charged the actual amount owed. The hold on your funds can last up to 3 days before it's released.
The answer to this simple question leads one to ask; what is the cost of convenience? It also may be the difference of having the available funds in your checking account or credit card when stopping for those last minute gifts.
Brian Goblirsch, Operations Department
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