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Spring Cleaning for your Credit.
By Danielle Wasson, Compliance Officer

     Spring seems to make people feel like it’s time for new beginnings, and it’s about that time of year when most people do their “spring cleaning.”  They wash their curtains, clean their blinds, and dust or scrub all of those little nooks and crannies that get missed in the day-to-day cleaning of our homes.  While you are in that mode, why don’t you take the time to do a little spring cleaning on your credit?  There are very few people in this world that can’t improve their credit score because it’s just that good. 

Why is your credit so important?  There are many, many companies that you do business with that may pull your credit report and your score could have an impact on what that business charges you.  The first of those that comes to mind is your auto or homeowner’s insurance.  According to Conning & Co., a Hartford, Connecticut-based insurance research firm, 92 percent of all insurance companies use credit information when underwriting new policies.  Looking at someone’s credit is viewed to give a picture of how “risky” an individual is.  Lower credit scores can equate to higher insurance premiums coming directly out of your pocket. Your credit score will also have an impact on your ability to buy things likes cars and homes, or get credit cards.  If you have a lower credit score, the bank has two options: deny your loan application, or; charge a higher interest rate. So either you aren’t able to make the purchase you would like to, or you are going to end up paying more for that item.

     So what can you do to work on your credit score? First, know what is on your credit report and where your score currently sits.  Each of the three credit reporting agencies (Transunion, Equifax, and Experian) must provide each individual one free credit report per year; these reports do not provide you with your current score, but it is fairly inexpensive to request that a score be provided at the time you order them.  Ordering your reports directly through the bureaus is very important, as it will give you the most accurate picture for each bureau. There are many websites that say they will give you a free credit report, but buyer beware: usually they do not end up being free and they may not be completely accurate.

     Once you get your report, review all of the information contained in it.  Are all of the items on your report actually yours?  If you had items in collections or any liens or judgments, are those reflected accurately?  I have had several instances where borrowers’ reports showed unpaid items in collections but those had been satisfied.  If there are inaccuracies, you need to contact each credit bureau and let them know what is incorrect and provide them with proof that it is incorrect.  Once the inaccuracy is corrected, you may notice an increase in your credit score.

If you pay for your score, each bureau should provide you with a list of four key factors that adversely affected your score.  By reviewing these, you will know what you need to do to help your
score.  If one is “Proportion of Balances to Credit Limits Too High on Bank Revolving or Other Revolving Accounts,” that means your credit cards are almost maxed out. 
One of the most common adverse factors I see is “Too Many Inquiries in the Last 12 Months”.  That means you’ve been trying to get loans, credit cards, or other types of credit.  Once you know what is dragging your score down, you know what to work on.

You can opt-out of pre-screened credit offers.  If you are one who likes to apply every time you get an offer in the mail, this is an easy way to keep you honest and out of trouble.  You can choose to opt-out for a five-year period or permanently.  For more information about opting-out of prescreened offers, visit the Federal Trade Commission’s page at https://www.consumer.ftc.gov/articles/0148-prescreened-credit-and-insurance-offers.  Set up your bills to be automatically drafted from your account.  If your payments are made on-time for your bills, you won’t have late payments.  If you don’t have late payments, you won’t have delinquencies show up on your credit report and you won’t have your other creditors taking you to collections.  Or, sign up for online bill pay (if you have access to internet banking through Peoples State Bank, you also have access to online bill pay!).  Bill pay will allow you to sit down and schedule your payments so they will be on time.

     Lastly, make a commitment to keep your score on an upward trend.  Keep your goals realistic but write them down and put that paper somewhere you will see it, like your refrigerator.  Or put a note in your wallet or checkbook that you will see when you go to use your credit card.  Protect your credit…if you don’t, no one else will do it for you!

 

Mortgage Shopping Advice.
By Danielle Wasson, Compliance Officer

     Home ownership is part of the proverbial “American Dream”, something that gives a person status and a sense of pride.  Holding equity in a home is a step in the right direction toward a positive financial
position.  As home value appreciates, your equity increases.  In these trying economic times, the dream of home ownership for some has fallen by the wayside.  For others, the economic crunch
has affected their ability to pay their current mortgage, and home foreclosures are still more common than they should be. 

     That being said, this is a great time to purchase a home or refinance your existing mortgage with low interest rates…as long as you buy within your means, take the time to research funding possibilities, and understand what exactly you are looking for in a lender.  Do some “shopping” before you decide upon a financial institution; look at interest rates—not only the rate itself but the type of rate to be charge, fees
charged, and requirements for private mortgage insurance.  Each of these factors can inherently change the total cost of your mortgage.  Fixed rate mortgages are great because they have built-in consistency and your monthly payment does not change; adjustable-rate mortgages are great because as New York prime decreases, so does your interest rate AND your monthly payment.  Of course, they are flip-sides
to both of these positive features.  It is important to you to look at your financial situation to see what will be the best fit for your needs.  Some institutions offer “no-cost” or “low-cost” mortgages and finance in your closing costs.  These are great if you do not have the funds available to cover all of the fees associated with the mortgage, however they also increase the total long-term cost of your mortgage.

     If you do not plan to stay in the home for a few years, purchasing a home may not be in your best interest.  With the costs of the purchase and subsequent sale of a home, you may end up losing money on the deal.  Until you are in a position to situate yourself in a community for a while, renting may be a better option. Make sure you understand what you CAN afford before you start shopping.  The Ability-to-Repay and Qualified Mortgage Rule became active January 10, 2014.  This increases underwriting standards used prior to an approval on a house loan.  It would be in your best interest to speak to a mortgage loan officer first and then meet with the real estate agent so that you will have a price range to work with.  Plus, it’s still a very active housing market and sellers will want to know if you’ve been pre-approved for a loan.

     Finally, it is to understand the terms and conditions of your mortgage.  Do not sign your loan documents until you are satisfied with the information and confident about the decisions you have made. Peoples
State Bank wants to help you through the process that leads to home ownership.  Our loan officers participate in on-going training in home loans.  We want to serve our community, making way for more of our citizens to become homeowners.  Please contact Lisa Steerman in Hoxie or Danielle Wasson in Colby if you have any questions about home loans.


 

Safe deposit box
By Danielle R. Wasson,Compliance Officer

     For some people, it’s a shoe box.  Others prefer a specific spot in a dresser drawer, filing cabinet, or under their mattress.  What exactly am I talking about?  I’m talking about the place where you stash your important documents, cash, whatever…so that you know where they are at and you can access them.  Is this is best idea?  Um, not so much!  If you don’t have one already, a safe deposit box is an excellent place to keep items that you want to be kept…well, safe! Most banks offer safe deposit boxes as a service to their customers and these are a safe, convenient way to store important documents.  Most banks charge rent annually for these boxes, based upon box size.   Safe deposit boxes are considered safer than your personal safe at home.  Even if a bank is robbed, it would not be possible for the crooks to get into your safe deposit box.  However, if someone were to break into your home, the chance exists that they could either open your safe or TAKE the entire safe. 

      There are some things to consider before placing items in your safe deposit box.  If it is a document that you may need at 3:00 a.m. or on a weekend when your financial institution is closed, you may want to
re-think putting that document in your safe deposit box.  Items like your passport, power of attorney papers, or a living will should be stored where you have access to them 24/7.  It doesn’t hurt to keep a
certified copy in the safe deposit box, but the original needs to be at your disposal on a moment’s notice.  Other items that should be placed in safe keeping include negatives of important photos (or a CD-ROM that holds copies of those photos), valuable collections, or pictures or videos of your home kept for insurance purposes.

     Your financial institution will not know what you put in your safe deposit box.  In fact, I don’t WANT to know what is in your safe deposit box.  Proper procedures include assisting you in opening your box with the guard key…and that’s it.  Then we as bank personnel leave you to do whatever you need to do.  Your financial institution is not liable for theft, damage, or loss of any item placed in a safe deposit box for that very reason.  Protect paper items from damage by placing them in plastic bags, and check with your insurance carrier if you are concerning about replacement costs for any items stored in your safe deposit box, should there be water or fire damage. Items placed in safe deposit boxes are not covered by FDIC insurance.  The purpose of FDIC insurance is to cover deposits placed in the bank.  Items stored in safe keeping are not deposits and will not be covered under that insurance.  Plus, I don’t know what is in your safe deposit box, so I could not replace it anyway.

     Lastly, there are better places to store cash than in a safe deposit box.  I know that some people do, but your purchasing power for that cash decreases because it cannot earn interest, either in a safe deposit box OR in your safe at home.  By placing those items in a certificate of deposit or savings account, you begin to earn funds to store your funds.  So, you’re not only earning money, but you are also adding a second layer of protection to those funds because then they will be FDIC-insured. So, take that shoe box and stick some shoes in it!  Place items of value in a safe deposit box at Peoples State Bank.  Stop by any Peoples State Bank location to set up a rental agreement.