Money

Secure Your Personal Information

• Use a cross cut shredder to turn documents containing personal and financial information into confetti.
• Lock up your wallet or purse at work, and never leave it in your vehicle.
• Avoid giving out any personal information over the phone unless you initiated the call, even if the person calling seems to have detailed information about your accounts.
• Don't carry identification that includes your Social Security number (SSN). If a business requests your SSN, question whether it is really necessary. If they insist, ask if you can provide only part of the number, such as the last four digits.
• Don't print your driver's license number, phone number, or SSN on your checks. Print only your first initial (instead of first name) and last name on your checks.
• Don't put your complete credit card account number on your check when you pay your bill. Instead just put the last four numbers.
• Read privacy notices from your financial institutions for instructions on how to say "no" to information sharing.

Secure Your Mail

• Install a locked mailbox or use a post office box to receive your mail, especially if it arrives while you're not home.
• Stop paper bills.
• Place outgoing mail in an official US Postal Service mailbox. These mailboxes are locked and tend to be more tamper proof than your personal mailbox.

Secure Your Computer

• Create difficult passwords that include a combination of letters, numbers, and special characters -- not your name, address, birth date, or anything that would be easily guessed.
• Don't store passwords on your computer or write them down where others may easily find them. Keep them somewhere secure -- hide them in a locked drawer, for example.
• Never respond to e-mails requesting personal information, or click on links to popular Web sites asking you to verify your information. Type in the correct Web address and go directly to those sites to log in instead.
  
  Find more ways to secure your computer here<needs to be linked to blog post>.

Secure Your Credit

• Review your credit reports from each of the three major credit bureaus once a year.
• Consider using a credit monitoring service to notify you of changes to your credit information.
• Monitor your financial accounts online and set up e-mail or cell phone alerts for unusual activity.

Married couples don't have joint credit histories. Your partner's credit history will not be merged with yours. Only joint accounts will be reflected on both of your credit reports.  If you don't add your spouse to your accounts, or vice versa, and you don't open any new accounts together, your credit reports will remain completely separate.

If you want to purchase a home with your partner, and you are relying on their income to qualify for a loan, you may need to include them on the mortgage. The lender will look at complete credit reports for both of you. However, if you earn enough income to qualify for a mortgage on your own, you do not have to include your spouse on the loan. 

Both of you will be responsible for any joint accounts until they are paid off and closed. Many divorced individuals are surprised to learn that even if their joint debts are assigned to their ex in the divorce decree, that they are still on the hook for the debt until the account is paid. Late payments made on joint accounts can hurt both credit histories.

Creditors cannot come after you for debts your spouse incurred on their own before marriage. If you live in a community property state: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, or Washington, debts incurred after you got married are considered "community property" and both of you will likely be responsible for them.

It would be beneficial for you and your partner to review your credit reports before marriage, to address any different approaches to debt and credit.  You should keep copies of both credit reports should any debts become an issue later. Two good books for you to read together are Debt Proof Your Marriage by Mary Hunt and Money Harmony by Olivia Mellan. Both are available from Powell's, a unionized bookstore.

You will have only one monthly payment to those creditors that choose to participate in the DMP, which will help greatly toward shrinking your debt.  

Better yet, a DMP offered by a credit counseling agency is not likely to hurt your credit. The majority of lenders will not report that you are repaying your account through a DMP. If you stick with your counseling program for at least three months, some creditors will even update your credit report and remove late payments that occurred right before you began the program.

When determining your credit score, FICO does not take into account credit counseling notations when calculating your score. However, make sure you work with a reputable counseling agency. If not, you may run the risk of the counseling agency paying creditors late, which will further damage your credit history. 

Get Credit Counseling and Debt Management Support

Get more information on the Union Plus Credit Counseling and Debt Management programs.  

A popular way for parents to pay for their children's educations is by borrowing through the Parent Loan for Undergraduate Students (PLUS) loan program. It is part of the Federal Family Education Loan Program (FFELP) and it allows you to borrow up to the difference between your child's educational costs and your child's financial aid award package. Parent PLUS loans carry a fixed rate and typically allow you to pay back the debt over ten years. There are also some flexible repayment options if you run into financial difficulties.

While student loans are fairly easy to qualify for, parent loans generally require good credit. There may be additional requirements such as:

• Two years of credit history,
• Two years full-time employment history with the same employer or in the same industry and,
• Two years at the same residence.

Educational loans are reported on the borrower's credit history as a type of installment loan. You help your credit history by paying the loan on time, but if you fall behind your credit will be damaged. Unlike credit card debt, most educational loan debt cannot be reduced or wiped out in bankruptcy.
 

A Few Facts About Cosigned Accounts:

• When you cosign, you agree to be responsible for the entire loan as if it is your own. If the primary borrower (the person for whom you cosign) pays late, or doesn't pay at all, you are on the hook for the entire loan plus any fees.
• In most cases, the lender does not have to notify the cosigner of late payments on the account. If the bill goes unpaid, you may not find out about it until you get a call from a collection agency.
• If the lender reports your account to the credit reporting agencies, the account will be reported under both the primary borrower and cosigner's names. The account affects both the borrower and cosigner's credit scores equally. The credit score does not handle a cosigned or joint account differently than an individual account.
• Even if the bills are paid on time, the debt will be included when calculating the cosigner's credit score, and could affect the cosigner's ability to get a mortgage or other loan.
• Lenders almost never remove cosigners from joint accounts. The primary borrower can refinance the loan, but if they are having trouble making payments, it is unlikely they will be approved on their own. In most cases the account will have to be paid off in full and closed in order to separate the secondary borrower (you) from the primary borrower. 

Here are some recommendations to help you start over after bankruptcy: 

• Use some credit: While you may never want to use credit again, to rebuild your credit rating, you must use some credit.  However, there is no need to carry a balance from month to month. Having four opened credit accounts that have remained current on payments can help to rebuild your credit. 
  
  If you are still in a Chapter 13 plan, where you pay back some of your debts over time, do not open any new accounts without first consulting your attorney.
• Make payments on time: Make all of your payments on time! If you are in a Chapter 13 plan, and you are having difficulty, call your attorney immediately. If there are any debts you kept out of your bankruptcy, such as an auto loan or student loan, stay current on those payments.

It is important to understand how long negative items can be disclosed on your credit report:

• Bankruptcy: All bankruptcies can legally be reported ten years from the filing date (not the discharge date, which is the date when the bankruptcy is completed). With Chapter 13 bankruptcies, credit reporting agencies will voluntarily remove it seven years from the date of filing. 
• Collection or charge-off accounts: Seven and a half years from the date the original account became delinquent (whether it has been paid or not). 
• Civil suits or civil judgments: Seven years from the date of entry into the suit or judgment, or the current governing statute of limitations, whichever is longer.
• Unpaid tax liens: Indefinitely if the tax lien remains unpaid.
• Paid tax liens: Seven years from the date the lien is paid or settled.
• Any other negative information (including late payments): Seven years from the date the payment was late.

Get more information about
how to build a strong credit rating.  
 

Take a look at the chart below comparing the difference between making a minimum payment versus making a fixed payment above the minimum.  The example uses a $2,500 credit card balance, a 21% interest rate with a fixed payment of $100. 

Time to pay off:

Making additional payments, or paying more than the minimum, help you to avoid the trap of having credit card balances stretch out for years and years. You can use the Credit Card Calculator to determine how quickly you will pay off your credit card balance, and you can save even more money if you do the following:

• Lower your interest rate. 
  Call your issuer, request a lower interest rate and if they refuse state that you will take your business elsewhere. If they still won't budge, consider transferring your balance to another credit card with a better deal. For instance, an interest rate of 12% with a $2,500 balance and $100 monthly payment will save you an additional $470 in interest. You will also pay off your balance in just under two and a half years.
• Add more money. 
  Even if you can't get a lower interest rate and you continue to make payments at a rate of 21%, adding $20 a month to your $100 monthly payment will allow you to pay off the debt in two years and three months; you will pay just under $637 in interest. Another example, by making payments of $233 a month (at the 21% interest rate) the balance can be paid-off in one year. With a lower interest rate, the balance will be paid down even faster! 

Here are the three other effective ways to tackle credit card debt:

• Pay off the credit card with the lowest balance first.
  This advice is based on the notion that you will feel great about paying off credit cards with small balances, and will be so excited the momentum will carry over to paying off cards with larger balances. By having fewer bills you minimize the possibility of missing payment due dates that can result in late fees or higher penalty interest rates. 
• Pay off the card with the highest interest rate first, regardless of the size of the balance. 
  You will save the most money using this strategy--though your actual savings amount will depend on the interest rate for each account. Start by paying as much as you can toward the card with the highest interest rate, and when you have paid off that card, move on to the next card, and so on. 
• Strategically pay down your balances to improve your credit score. 
  With this method, you look at your available credit lines on each account and you work to reduce each of your balances to below 30% of your available credit, or even lower if you can afford it. This can boost your credit score, since a high balance relative to your credit limit is an important factor in determining your FICO credit score. If you have generous credit lines, you may not need to consider this approach.

It is important to note that you don't have to carry debt to build a strong credit score. When you pay off a card, don't close it (unless there is an annual fee and the issuer won't waive it). Keep it active by using it from time to time for purchases you would make anyway, and pay the balance in full.
 

The median FICO credit score is 723, but FICO scores above 760 are ideal for getting the best credit offers. If your credit score is not as high as you would like, here are five quick ways to help improve it.

1. Pay down credit cards that are close to their credit limits. 
   If you are using more than 30% of your available credit on any individual credit card, your score will likely be brought down by that balance. Try to pay down cards that are getting close to their credit limits as quickly as possible. After you pay off a credit card, do not close the account unless there is an annual fee the card issuer refuses to waive. 
2. Check your credit report and dispute mistakes that may lower your score. 
   Many credit reports contain errors. When you dispute these errors, keep your letter short and to the point, and save a copy for your records. If you request your investigation online, print out a copy of the page before you send it and be sure to note the date you submitted it. Lenders and credit reporting agencies must get back to you within 30 days to tell you whether they are correcting the information or confirming it. 
   
   Remember: don't dispute old accounts that still appear open on your credit report. Doing so may lower your score!
3. Build positive new credit references by using credit (carefully). 
   Many people who have experienced credit problems are scared they will get in trouble if they start using credit again, but avoiding credit altogether can hurt your credit score also. You don't have to carry balances to build credit, but you can use a major credit card from time to time to keep your account active and to build a positive credit reference. Charge things you would buy anyway: groceries, gas, your cable bill, for example, and then pay the balance in full to avoid debt.
4. Pay your bills on time.
   Making a disciplined effort to pay your bills on time each month is one action that will pay off in the long run. You may not see results instantly, but over time, if you keep up good payment habits, you'll find your credit will get stronger.
5. Keep it going. 
   When it comes to building better credit, time does heal the wounds. As negative information becomes older, it has less of an impact on your credit scores, especially if your report lists current, positive credit references. Pay your bills on time, monitor your credit reports for accuracy, and maintain low balances on your credit cards. Not only is that a good way to build better credit, but a good way to manage your financial life as well!

When you are ready to buy or refinance a home, contact Union Plus Mortgage Company, a union-owned company that provides home financing options to union members and their families.

Visit UNIONPLUSMORTGAGE.COM
or call 1-855-UNION-53 (855-864-6653)
to speak with a loan officer

Credit Account "Charge Off"

When you fall far behind on a credit account, the lender will "charge it off." This means it must be treated as bad debt for accounting purposes, and you are still responsible for payment of the bad debt. Usually, the debt will be turned over to a collection agency, which may charge additional fees and interest.

Credit Report Impact

Regarding your credit report, collection or charge-off accounts can be reported for up to seven years and 180 days from the date you miss your first payment leading up to the account being charged off or sent to collections. Here is an example:

• January 1, 2010: You miss a payment and the account becomes delinquent. 
• June 1, 2010: The account is charged off by the lender.
• December 1, 2010: The account is acquired by a collection agency.
• June 29, 2017: The collections account and charge-off must be removed from your credit reports.

Under federal law, the Fair Credit Reporting Act, the collection agency is required to inform the credit reporting bureaus of the original date you, the debtor, fell behind.  The credit reporting bureaus must disclose the date of the account delinquency; in this example the delinquency date is January 1, 2010. 

If the debt is too old to be reported you can dispute the account with the credit reporting bureaus. You should monitor your credit report to make sure it is removed and does not reappear. You can also file a complaint with the Federal Trade Commission http://www.ftc.gov/bcp/index.shtml  that enforces the federal credit laws.

Collection Agency Lawsuit

An account that goes to collections is a negative item whether it is paid or unpaid. The same is true if you settle the debt for less than the full balance. However, if you do not pay a collection account, you run the risk of being sued. If you lose the lawsuit, a judgment will appear on your credit report, which will hurt your credit for another seven years.

That brings up one more issue to consider: whether the collection agency can still successfully sue you to collect your debt. Every state has what's called "statutes of limitations" for debts. The statute of limitations that applies to your debt could last for two years – or twenty years – depending on your type of debt and the state law.

For example, let's say the statute of limitations in your state is four years. The collection agency can attempt to collect payment for debt after four years. However, if the collection agency takes you to court, and you can prove that the debt falls outside the statute of limitations, it is unlikely the collection agency will win the case against you.

Legal Help

To make sure you understand your rights when it comes to collection accounts, you can contact a local consumer law attorney or use the Union Plus Legal Services for help.

• Fact #1: If you contact a credit reporting agency and ask them to remove several old accounts that you don’t use anymore your credit score will likely decrease.
  
  Most people find accounts on their credit report that are listed as open, when in fact they haven't used them for a long time and don't intend to use them again. Credit cards, in particular, are rarely closed unless you specifically ask the lender to close them. You can call or write to the lender (the contact information should be listed on your credit report) and ask them to update your credit report to list the account as closed, and they must do so. Another alternative is to write to the credit reporting agency and ask to have the accounts listed as closed.
  
  But, before you do that, keep in mind you may lower your credit score. If you really want to close out those accounts, do so slowly and selectively. Start with the more recent account, leave the oldest account open, and close retail cards before you closing major credit cards.
• Fact #2: Not all inquiries into your credit history will affect your credit rating. 
  When any company requests your credit report, it creates an inquiry that is listed on the report. By law, the credit reporting agencies have to disclose all inquiries on your credit report when you request it. But, not all inquiries are shown to lenders or used to calculate your credit score.
  
  "Soft" inquiries are credit report requests you will see, but are not visible to anyone else ordering your credit report. Soft inquiries don't affect your credit score. They include your credit report request, requests when your credit is reviewed for pre-approved credit offers or when monitored by your current lenders.
  
  "Hard" inquiries are credit report requests from lenders when you apply for credit (including services such as cell phone or utility accounts). They do show up on the credit report supplied to lenders and they will affect your credit score. Inquiries count for a small part of a credit score, but it is a good idea to avoid multiple inquiries in a short period of time, especially if your credit isn't very strong.
  
  Inquiries stay on your report for two years, though inquiries within the past year affect your credit the most.
• Fact #3: If you have a collection account on your credit report it remains there for seven years and six months from when you fell behind.
  Collection or charge-off accounts can be reported for 7½ years from the date you first fell behind leading up to the collection or charge-off. It does not start when the account was placed for collection or from the date of last activity. This is true whether or not you pay off the collection account.
  
  Example: You fell behind on a payment due January 1, 2000. The account was charged off for non-payment in June 2000. In December 2000, it was turned over to a collection agency. The 7½ year period starts January 2000, when you first missed that payment. The collection agency is required to report that January 1, 2000 date to the credit reporting agency so it won't be reported longer than it should be. This doesn't always happen, so be sure to check your credit report for that detail.
  
  Tip: It's illegal for collection agencies to tell you they can report information forever if you don't pay.
• Fact #4: You decide to cosign a loan for a friend or relative.  As the cosigner, you must worry about the debt affecting your credit report even if it is paid on time. 
  You may want to help out a friend, child, relative or even employee by cosigning a loan for them. Think very carefully before you do. The main reason most people need a cosigner is because they have bad credit or no credit. If they don't manage the new loan well, the cosigner will suffer.
  
  Lenders don't have to tell the cosigner in most cases that the loan they cosigned is not being paid on time. The cosigner may end up with a charge-off, repossession or collection account on their credit report — sometimes without even knowing the loan was behind. If the primary borrower doesn't pay the loan, or files for bankruptcy and includes the debt, the cosigner is responsible for the entire loan plus collection costs.
  
  Even if a cosigned account is always paid on time, the debt will count as your debt for your credit score. And, if you apply for a loan, the loan officer may factor in that debt when determining whether you have enough income to cover a new loan payment.
  
  If you do cosign a loan, make sure you monitor your credit report and step in immediately if the loan isn't paid on time.
• Fact #5:   If you have a $3,500 balance on your credit card with an interest rate of 15%. It will take you 19 years and 1 month to pay off the balance if you make only the minimum payments of 2.5%.
  
  Small minimum payments can drag out your credit card debt for what seems like forever. If your balances aren't budging, Visit our Debt Management hardship help assistance for more guidance in how to manage your debt.
• Fact #6: Should you divorce or separate from your spouse, and the joint accounts you both shared become assigned to your ex.  You are still responsible for any remaining balance on those accounts — even if those accounts are closed. 
  
  It is a good idea to close joint accounts from future charges when you separate or divorce, but that doesn't get you off the hook for any current balances. Joint accounts assigned to your ex in divorce can be reported in both names until you close and pay off, or refinance the account. Information from when the account was jointly held may still be reported for up to seven years if it is negative.
  
  What's important to understand is that even if the divorce decree assigns the debt to your spouse, that doesn't relieve your responsibility for the debt to the lender. The divorce decree is an agreement between you and your ex. It doesn't erase your original contract with the lender in which you agreed to pay back the debt. It is very important, if at all possible, for spouses to refinance joint accounts in the responsible spouse's name only. Otherwise, monitor any remaining joint accounts each month to make sure they are paid on time. If not, talk to your attorney and consider making minimum payments to protect your credit while the matter is straightened out.
  
  Fact #7: You have a fixed rate credit card. Your credit card issuer can raise the interest rate if it applies the new interest rate only to new purchases, not to existing balances.
  
  Card issuers can typically only raise the interest rate for new purchases, not outstanding balances, and require 45-days advance notice. There are a few exceptions to the rules that protect against rate increases on existing balances: you are sixty days late with a payment, you have a variable interest rate, you have an introductory rate that expires, or you are in a workout agreement and don't make your payments on time.