This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

Credit scores are a three-digit scoring system that financial institutions and other lenders use to determine whether you qualify for loans and what your interest rate will be.

Building up your credit score is critical for saving money long term with lower interest rates and insurance premiums. It also helps to ensure that you will be able to access credit when you need it. Most lenders use a FICO score, which ranges from 300-850, and is based on your reported payment history from all your creditors.

Here are some of the key components that make up your credit score and things you can do to bring your score up:

• Payment history: A history of paying bills on time is the biggest component and accounts for 35% of your score. Set up autopay to ensure your bills are always paid on time.
• Utilization: 30% of your credit score is determined by how much of your available credit you are using. Pay down credit card and line of credit balances until you are using 30% or less of your available credit (for example 30% of your total credit card balance) to help build a healthy score.
• Length of credit history: Starting a credit history early is a great way to get a head start on building your credit score for the future. Your total length of history counts for 15% of your score. One way to start building credit is with a secured credit card. Secured credit cards require a deposit and your credit limit is based on the amount that you are willing to deposit. Make sure to use your credit card responsibly!
• Credit Mix: Credit scores consider the mix of types of credit on your credit report (e.g. mortgage, car loan, credit card). This makes up 10% of your score. Having a few different types diversifies your credit, but secured credit is generally a stronger indicator for your score. Secured credit means that there is collateral associated with your loan. Secured loans include mortgages and auto loans.
• New Credit: Opening several accounts in a short period of time (e.g. multiple credit card applications within six months) may reduce your credit score, especially if you have a short credit history. New credit accounts for 10% of your score. However, the score will recognize if you are shopping for rates (e.g. applying for a car loan with multiple lenders) within a limited period of time. Applying for credit or opening a new account can have a negative impact on your credit score but this drop is typically small and doesn’t last very long.

If you’re applying for a loan or credit card, consider having a conversation with your lender about your credit history and score. If your score isn’t where you want it to be, they may be able to offer suggestions to help you raise your score.

* Membership eligibility requirements apply. Federally insured by NCUA.

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

Your mortgage and home equity products are likely some of your biggest expenses.

With rates being low, many people are finding that it’s a good financial decision to refinance to meet their financial goals. If you’ve been thinking about refinancing, here are some reasons to contact your financial institution:

• You’re ready to consolidate your home loans: If you obtained a first mortgage and an equity loan to purchase your home, you may be able to refinance the two loans into one and lower your overall monthly payments. Equity loan rates tend to be higher than first mortgage rates so you may save on total interest paid over the life of the loan.
• Cash out refinance: Use the equity in your home to pay for major expenses like home improvement, college, vacations or to pay off higher interest rate credit card debt.
• Lower rate and lower payments: Refinance to a lower interest rate to reduce monthly payments and the overall amount of interest paid over the life of the loan.
• Shorten term: To build equity faster, reduce interest paid over the life of the loan. If you’ve owned your home for several years, it may be possible to shorten your term and keep about the same monthly payment.
• Change your product: Many people refinance from an adjustable rate mortgage (ARM) to a fixed rate product.  ARM rates are typically lower and are popular for getting into a home for the lowest monthly payment. However, with an ARM loan, your interest rate and resulting monthly payment will fluctuate over the life of the loan. Many people choose to refinance to a fixed rate mortgage to not have to worry about the interest rate and payment amounts changing.

If you’re ready to explore refinancing, reach out to a financial institution. ACFCU’s real estate team is here to listen and advise you on your best options.

*Equal Housing Lender. Membership eligibility requirements apply. Federally insured by NCUA.

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

Consumers are starting to purchase vehicles again and now can be a good time to shop for a car.

Dealers are offering discounts to entice buyers, and financing options from financial institutions are very competitive. If you’re in the position to purchase a car, here are some things to consider:

• Research cars online first: Know what you’re looking for before you go to the dealership. Research quality, safety, features, price and value so you are prepared when you arrive.
• Compare protection plans and service options between the dealer and a financial institution: Financial institutions may offer options like warranties and GAP insurance that are significantly less expensive than coverage offered by dealerships.
• Shop around between dealerships: Compare cars at different dealerships and determine the “drive off price” of the ones you’re most interested in. Drive off price includes the list prices, processing fees, taxes, registration and more. If you have an existing car that you’re trading in, compare what different dealerships will offer.
• Maximize dealership perks: Dealers are trying to entice buyers to purchase right now and may offer the choice between 0% financing or a cash rebate. Compare that to financing offered by your financial institution. If your financial institution can give you a very low loan rate, it may be a better deal to choose the dealer’s rebate and finance with your credit union or bank. ACFCU offers a calculator to help you determine your best option. Some banks and credit unions may “rate match” if another financial institution quotes a lower rate.
• Shop around if you’re considering a lease: Some credit unions or banks may offer lease-like products with more flexibility and features than the dealerships. Compare options to seek out the most competitive payment scenario.

Not everyone is able to make a major purchase right now, but for those that are, this may be a good time to buy a new or “new-to-you” car. For more tips, contact the ACFCU Loan Advisors at 703-526-0200 option 2. Or apply online to get started, and one of our Advisors will reach out to you and help you through the process.

*Membership eligibility requirements apply. Federally insured by NCUA.

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

During this challenging time for our community, many have taken on debt to support themselves and their family. Here are tips for managing and paying down debt:

• Understand your household expenses: Make a list of your fixed expenses such as rent or mortgage, utilities and loan payments. Add the due dates to your calendar to pay on time and set up autopay options when possible.
• Prioritize your debts: Make at least the minimum payments on all of your debts. Use any extra funds to pay down debts with the highest interest rate (usually credit cards). Every little bit makes a difference and will help you save money on interest.
• Set spending limits: It’s easy to overspend when you don’t set boundaries. Once you’re clear on how much is coming in and going out, set spending limits.
• Put your credit cards away: Sometimes, the key to preventing excessive debt is making it difficult to use your credit cards. Consider locking away your highest interest credit cards and moving a debit card or lower interest credit card to the top of your wallet.
• Shop for the best rates: Compare rates both when you are taking on and managing debt. Look for lower interest options and ask your financial institution to match the lower rate offered to you. You can also explore refinancing high interest debt.
• Build up your emergency savings account: Build your emergency savings account with a goal of saving three to six months’ worth of expenses. Having a savings buffer will reduce your need to take on additional debt later.

We are proud to be part of this resilient community. As Arlington’s credit union, we support our members throughout their financial journey and are here to support our neighbors as they explore options for financial success.

*Membership eligibility requirements apply. Federally insured by NCUA.

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

This is a challenging financial time for many in our community and navigating resources can be overwhelming. Here are a few key resources that you and your family can turn to for support:

• Assistance for food, rent payments and basic needs: If you’re having a hard time paying rent or utilities, accessing food, or making ends meet, contact the Arlington Department of Human Services at 703-228-1300. All services are free, confidential and safe.
• Your financial institution: Reach out to your financial institution proactively to ask what solutions they can provide. This could include payment deferrals, refinancing and more.
• Applying for unemployment: The CARES Act currently provides unemployment insurance to people who have been laid off, furloughed, or had hours or pay cut due to COVID-19. The process takes place through the state but the federal government is adding an additional $600 per week to your payment. Monitor the Virginia Employment Commission’s website for updates on unemployment insurance applications.
• Federal student loan payment deferral: Take advantage of loans being deferred through September 30. You don’t have to make any payments during this time, and there won’t be interest or penalties levied against you. While private student loans don’t have this same option, you can still ask your loan servicer if they are offering any COVID-19 related relief.
• Mental health & wellness: We know that many people across the country and in our own community are suffering right now. If you or someone you care about is looking for mental health support, Arlington provides a wonderful range of resources and tips for all aspects of mental wellness.

We are proud to be part of this resilient community that offers support and resources for you, our neighbors, whatever your challenges may be. We’re with you.

*Membership eligibility requirements apply. Federally insured by NCUA.

This monthly column comes from the Arlington Community Federal Credit Union as part of their mission to financially empower the community. Credit unions are not-for-profit member-owned cooperatives and anyone who lives, works, worships, volunteers, goes to school, or does business in Arlington, Falls Church, Alexandria, or Fairfax County is eligible to join ACFCU.*

The impacts of COVID-19 are creating financial uncertainty for people everywhere. Here are some tips to help you navigate your finances in a difficult time.

• Contact your financial institution: Reach out proactively if you have concerns about paying bills on time. Institutions may offer payment deferrals, elimination of early withdrawal penalties for liquidating certificates (known as CDs at banks), hardship loans, or other options.
• If possible, build up your emergency savings: If you still have an income stream, set aside savings for an emergency account that covers at least three to six months of expenses. If you need to tap into this later, you’ll be glad that you prepared.
• Consider low interest debt options: Evaluate your options with your financial institution to see what works for your situation. If you need to borrow, using a Home Equity Loan or Home Equity Line of Credit may be less expensive than higher-interest options like credit cards or unsecured personal loans. For those who don’t own homes, look no further than your car. Auto loan interest rates are very low right now, letting you take advantage of your car’s equity. Make sure to compare rates between institutions to find the best deal. It never hurts to ask for a rate match or lower rate.
• Reach out for government assistance for urgent needs: If you are in a crisis, call Arlington Department of Human Services at 703-228-1300. They can refer you to resources for food assistance, emergency financial assistance and more. Visit the Virginia Employment Commission website to apply for unemployment insurance.

Arlington is full of people who are working hard to support our community. If you need help, make sure to look into the many resources being provided by government, non-profits, and local businesses.

Federally insured by NCUA. *Membership eligibility requirements apply.