What is a credit report?

Image of a book with financial literacy on the cover and a $100 bill coming out the top

A credit report is a statement that has information about credit activity and credit history. This report tracks your performance with credit like new accounts, payments, and credit utilization. There are three credit bureaus: TransUnion, Experian, and Equifax. All three of these bureaus have multiple types of score models (example: FICO Score) that create a rating that lenders utilize to determine your credit worthiness.

Lenders use these reports as one of many tools to determine if they should or should not lend to you. Your individual credit score will vary depending on the bureau and score model your lender chooses to use. Often credit unions will look at this information but also consider your past relationship with them to provide more flexibility based on your individual situation.

What is a “debt-to-income” ratio?

Image of a book with financial literacy on the cover and a $100 bill coming out the top

A debt-to-income (DTI) ratio is your combined monthly debts divided by your gross (before taxes) monthly income. This ratio is one way lenders determine what they think you can afford and will help them decide if adding an additional monthly payment is possible.

A good rule of thumb is to try to keep your DTI ratio below 43%. You should try to keep this number lower. By doing this you will have more of your income to use on other things besides payments, such as entertainment, food, travel and savings

The Consumer Financial Protection Bureau has more information on this topic. If you are interested in learning more visit: https://bit.ly/3dlaEyo

APR Explained

APR Explained: Why A Lower Rate Is Your Highest Priority

How much does your credit card or loan cost you? The answer to this lies in the Annual Percentage Rate (APR). This is a universal measure used to compare the prices of different financial products such as credit cards, loans, and mortgages. To compare different credit products and loans, take a look at the APR and it will give you an idea of how much each costs. This way, you can make a better and informed decision.

What is APR and how does it work?

When applying for a loan, getting the lowest interest rate should be the highest priority. The annual percentage rate is the interest paid for a loan yearly. In the simplest terms, this is the cost of borrowing money.

The APR is shown as a percentage. It contains all the costs and fees related to the loan. The fees and costs are different depending on the type of loan you apply for. For most of the loans apart from mortgages, the fees relate to maintaining the loan and processing.

The most significant advantage offered by APR is the ability to compare loan rates. Take a credit card for example. It comes with different types of costs and fees associated with the account. With the APR, you can compare different cards easily.

The APR is required to be shown to all customers by loan issuers and credit card companies. It facilitates a good understanding of the actual loan rates applicable as per their agreement. Or credit card companies, they are allowed by law to advertise their monthly interest rates. However, they are required by law to state the APR to all customers before signing any agreement.

A loan can be offered with either a fixed or variable APR. The fixed APR loan has a fixed interest rate with a guarantee not to change during the entire life of the loan. The variable APR loan’s interest rate can change any time.

Is the lower APR better?

To put it out there, the lower the APR, the better the loan. However, when it comes to a product like mortgage, the lower APR loan might not be the best. Some mortgage loans give you a lower APR but you pay higher closing costs, higher points and other fees associated with closing the home loan.

Always go for a loan with a lower APR. This is the cost of your loan and the lower you go, the better. However, make sure to read all the details when getting a loan and ask the originator for as much information and details as possible.

Four Ways to Compare Online to Offline Colleges

In the New Year, it’s an excellent time for a quick change. Most people relate it to education because each year more than 20 million people get enrolled in universities and colleges. Whether you are thinking of enrolling in a program or starting to earn credits in a new field, it’s a great time to learn on the web. Nowadays, everyone uses the internet and stays online for several hours, playing video games or watching videos.

In the meantime, you have seen several ads for online colleges. These online colleges offer several programs that are convenient, flexible and money-saving. But do you think that is enough for you? In this blog post, you will see how you can compare online to offline colleges.

Get to Know About Four Best Ways to Compare Online to Offline Colleges :

1.      Compare the Cost of Both:

A Recent survey directed by the American Association of State Colleges and Universities uncovered that 60% of the 400 state-funded colleges reviewed charge the equivalent per credit hour for online courses as they accomplish for study hall courses. The highest contrast in price will be between foundations, not between sorts of organizations.

2.      Your Convenience:

You can concentrate on your course load as your timetable permits. It implies that you can keep up your work and other obligations while finishing your training. There’s likewise the driving issue. A study hall course will expect you to communicate, adding time and worry to your instruction.

3.      The Piece of Education:

The most important question you have to address while considering your school alternatives is training quality. That is what you’re there for, right? The investigation found that studies in online classes are bound to contribute in-class conversations and have discussions with peers about their significant fields.

4.      Worth of Both Colleges:

The genuine issue found for online colleges is their reputation. A few, similar to the University of Phoenix, have a reputation issue. Others, as Southern New Hampshire University, have earned a lot of positive press for their inventive way to deal with instruction. At the point when you’re picking a degree program, look at ranking like US News and World Report’s rundown of best online colleges.

Credit Unions vs Banks

Top 5 Reasons Why Credit Unions are better than Banks

Are you one of those people who walk past a credit union in your community without looking twice? Then you don’t know what you are missing out on when it comes to financial matters. One of the main reasons why some people are not in credit unions is because they don’t know how they operate and what they entail. Credit unions are non-profit organizations with an objective of serving their members rather than making profits from service provision. They offer similar financial services compared to banks such as loans, checking and savings accounts, credit cards, and mortgages.

Here are five reasons why you should choose a credit union over a bank:

 

  • Motives

 

The main reason why credit unions exist is to serve their members rather than accomplishing the goals of the institution. Members come first in credit unions then the rest follows. On the other hand, banks are formed with the aim of making profits, and they’ll do whatever it takes to meet their profit margins.

 

  • Better interest rates

 

Credit unions have lower interest rates on loans, credit cards, and even mortgages. Besides that, most credit unions are less strict when it comes to loan eligibility, and they are not selective of one’s source of income. Savings accounts, CDs, and bonds in credit unions also yield returns compared to having the same in banks.

 

  • Structure

 

For those who are not members of any credit union, you might not be aware that credit unions belong to members and they are responsible for their operations. Once you’ve made your first deposit, you are granted voting rights, and any surplus income will be reimbursed as dividends. Being a member means that you get financial services at lower rates and participate in decision making.

 

  • Fee-free accounts

 

A majority of banks require account holders to maintain a minimum balance which is not the case with credit unions. One of the main reasons why most people are drawn to credit unions is because they offer free checking accounts and no minimum balance requirements to cut down any extra fees.

 

  • Relationship building is valued

 

Let’s face it, credit unions value members who have been with long enough and they tend to be more lenient when such members want to borrow funds. Besides enjoying lower interest rates, when applying for loans, the terms and conditions are more flexible for such members provided their credit score is high. In case you haven’t joined a credit union, take the time to visit one in your local community; you’ll be surprised to see a big difference between them and banks.