‘Stash Your Cash’ for youth next month

National Credit Union Youth Week is coming up next month – April 22 to 28. It’s a great opportunity to encourage the youth in your life to begin some basic financial planning. This month is the time to help youngsters set aside extra allowance money. They can open a savings account or make a deposit into their existing account during National Credit Union Youth Week – and qualify to win fun prizes!

This year’s youth week theme – “Stash Your Cash @ the Credit Union” – is a fun, festive pirate campaign aimed at capturing youth’s attention then providing them some valuable financial knowledge.

During National Credit Union Youth Week, Hawaii Community Federal Credit Union (HCFCU) will join credit unions around the country to take the opportunity to stress the importance of financial education for youngsters. HCFCU will encourage young people to open new savings accounts and make deposits during National Credit Union Youth Week. Youth who visit an HCFCU branch and open an account or make a deposit into an existing account will not only receive a free giveaway, but also will be eligible for prize drawings in three age groups: 0 to 6, 7 to 12 and 13 to 18.

Additionally, HCFCU will participate in the coinciding National Youth Savings Challenge as a real-life exercise in making money grow. The Savings Challenge, now in its fourth year, is a focal point for teaching the benefits of saving for goals. During last year’s National Youth Savings Challenge, in just one week’s time, 364 credit unions across the United States welcomed more than 66,000 youth who deposited more than $9.6 million – more than doubling the amount deposited nationwide during the 2005 Savings Challenge. HCFCU’s five branches more than met their goal for total deposits, garnering 66 new accounts and 396 deposits for a total of $68,535.09.

For more information about National Credit Union Youth Week and all guidelines for entering a youth in a local Youth Savings Challenge, visit one of the HCFCU branches in Kailua-Kona, Kaloko, Kealakekua, Kohala or Pa`auhau; or go online to www.hicommfcu.com and click on the Youth Savings Challenge contest link, coming soon.

Five FICO score factors you need to know

Edited information from article by Mary Royston, Marketing & Communications Manager, Callahan & Associates, Inc.

Many people lack knowledge about their credit scores, arguably the single most influential number in their lives. In fact, 49 percent of 1,013 consumers polled do not understand that credit scores measure credit risk, according to a 2005 survey by the Consumer Federation of America and Fair Isaac Corp., the company that created the most widely used credit score formula called FICO.

The following five categories make up a FICO credit score.

1) Payment History: 35%
This category includes payment history information about several different types of accounts such as credit cards, retail accounts and installment loans. Many factors are considered including number of past due items on file, amount past due on delinquent accounts or collection items and severity of delinquency (how long past due).

The most recent 12 months of payment history is weighted by 40%; prior 12 to 24 months, 30%; prior 24 to 36 months, 20%; prior 36 to 48 months, 10%; and older than four years, 0%.

2) Capacity (Amount You Owe): 30%
The FICO scoring model weighs capacity heavily because it knows that the majority of Americans who go bankrupt charge up their cards to the limits before they file. The FICO model considers three separate components of an individual's credit when assigning capacity points:

• Installment balances compared to the original loan amounts.
• Revolving account balance compared to an individual's revolving credit limit on an account-by-account basis; and
• Total revolving account balances compared to an individual's total revolving limits.

It is in a members' best interests to keep balances low on all revolving credit and pay off debt within open accounts instead of closing accounts and consolidating it into one or two accounts with higher balances.
    
3) Length of Credit History: 15%
Even if a member no longer wants an older account, he or she should think twice about closing it. Lenders are looking for borrowers with long credit histories. Also, members with new credit should be cautious about opening many accounts. Rapid account buildup may look risky because of uncertainty in handling the credit.

Hard inquiries, or requests from creditors for a copy of a report, are tracked on the credit report for 24 months. But, only the inquiries from the most recent 12 months are included in the FICO score calculation.

4) Types of Credit: 10%
This category looks at the overall mix of credit such as credit cards, mortgages or consumer finance accounts. Members should try to balance the mix but are advised not to open new credit accounts for balancing purposes unless necessary. It is unlikely that adding accounts will improve their credit scores.

5) New Credit: 10%
Approximately 10% of your credit score is based on how many recent new accounts you have established. This factor reviews:

• Number of accounts
• Length of accounts
• Recent requests for credit report
• Length of time since credit report inquiries were made by potential lenders

Members should do all of their rate shopping in a two-week period since they can inquire an unlimited amount of times and it will only count once in that time frame. Also note that if members check their credit scores by going directly to the credit reporting agency, it will not affect their credit.

Sources:

• Callahan & Associates, Inc., www.creditunions.com
• www.myfico.com
• Your Credit Score. Liz Pulliam Weston, Prentice Hall Publishing, Upper Saddle River, NJ, 2005.
• www.bankrate.com

$2 bill making a comeback!

Happy birthday to Thomas Jefferson this month, who was born on April 13, 1743. Jefferson was the third President of the United States, the principal author of the Declaration of Independence and one of the most influential founding fathers for his promotion of the ideals of Republicanism in the U.S. It’s TJ’s portrait that adorns our nation’s $2 bill.

According to Wikipedia, the $2 bill is one of the most rarely-seen denominations of U.S. currency. They are almost never given as change for commercial transactions, and thus consumers rarely have them on hand. Production of the note is low – approximately 1% of all notes currently produced are $2 bills.

The design on the obverse of the bill, the portrait of Thomas Jefferson, is the oldest of all current U.S. currency, having been adopted in 1929. The reverse side, with the painting “The Declaration of Independence” by John Trumbull, is the second oldest design having been adopted in 1976.

Today, $2 bills are not frequently reissued in a new series like other denominations which are printed according to demand. When the Federal Reserve Banking System runs low on its current supply of $2 bills, it submits an order to the Bureau of Engraving and Printing, which then prints more. Demand for $2 bills is low enough that one printing can last for many years.

The perceived rarity of a $2 bill can be attributed to its low printing numbers. Lack of public knowledge of the $2 bill further contributes to its perceived rarity. This perceived rarity can lead to a greater tendency to hoard any $2 bills encountered and thus decrease the circulation further.

There is a common misconception that the $2 bill is no longer in circulation. However, according to the U.S. Treasury, the bill remains one of its circulating currency denominations. In fact, in recent years, the $2 bill is enjoying a reawakening. In 2005, 61 million $2 bills were printed by the U.S. Bureau of Engraving and Printing. This is more than twice the number of $2 bills that were printed between 1990 and 2001!

Speaking of birthdays, HCFCU is counting candles and counting down to the 70th Annual Membership Meeting and Banquet Saturday, May 12, at the Waikoloa Beach Marriott Resort & Spa. Mark your calendar and plan to attend this grand event!

Monitor your credit with AlertMe

Identity theft is a growing problem that affects millions of Americans each year. It occurs when someone uses personal information without your permission to commit fraud or other crimes. Identity thieves use information such as your name, Social Security number, credit card number or other identifying information.

Hawaii Community Federal Credit Union is excited to announce AlertMe, a new credit-monitoring service designed to help members fight identity theft. AlertMe gives early warning of activity on your credit report. Since credit report activity can be a sign of possible identity theft, early detection can help you catch problems quickly to minimize losses.

AlertMe offers numerous services including:

• Daily credit monitoring: By scanning your credit daily, AlertMe is a first line defense against discrepancies that may affect your credit worthiness. When a significant change such as a new account, change of address or delinquent account is detected on your credit file, AlertMe will send you an e-mail notification. AlertMe also provides the steps you should take if you believe the activity could be fraudulent.
• Identity theft insurance: Included with your subscription to the AlertMe service is up to $25,000 in identity theft insurance to cover your out-of-pocket expenses incurred to restore your identity and repair your credit (not currently available to residents of Texas or New York).
• Optional online access to credit reports and scores: AlertMe gives you online access to credit reports and scores. You can easily and quickly request a credit report and score anytime you like. In addition to being able to view or print the credit report at the time you request it, AlertMe keeps a historical copy of each credit report you request through the service.
• Monthly reassurance notification: If there has been no significant credit activity in the past 30 days, AlertMe will send you an e-mail letting you know there has been no activity and that your credit continues to be monitored.
• Yearly free credit report reminder: Provides you a reminder and instructions on ordering the free credit reports available due to the Fair and Accurate Credit Transactions (FACT) Act

The AlertMe cost is $4.25 per month. Quarterly and annual plans are available at a reduced rate. For more information or to enroll, click on the AlertMe announcement on HCFCU’s website, www.hicommfcu.com.