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CU System Archive

CU System

Debt is down but so are some credit scores

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SAN FRANCISCO (7/20/09)--Credit unions may get questions from their members about credit scores, especially if the members have been working off their debt and find their credit score is less than a year ago. While debt for the average American is down, many are seeing lower credit scores. Credit card companies that tightened their credit available to consumers the past two years have impacted their cardholders' scores, according to a survey by Credit Karma, a San Francisco-based online research and education business. When a card company reduces the credit card limit and the consumer still uses the card the same as always, the consumer is tapping into a greater percentage of the current available credit than under the older, higher limit. This affects the credit score (BusinessWeek.com July 14 and WalletPop.com July 16). Credit score bureau Experian says that American's median score at VantageScore --a competitor to the well-known FICO score invented by Fair Isaac--fell eight points in March--down 1% from the year earlier. TransUnion's average TransRisk score showed a similar 1% decline in first quarter over first quarter 2008, reported BusinessWeek.com. In May the average U.S. consumer's credit score was 674, down nearly 20 points since 2007 according to Credit Karma and Experian. In 2007, the average credit score for the first six months was 692. Equifax, however, said that in May the average Equifax Risk Score rose 0.3% from May 2008. It attributes the slight decrease to the fact that Americans are using credit cards less frequently, are paying off balances in full, and are staying current on their payments. These consumers are balancing out the delinquent borrowers. Roughly 72% of consumers saw their scores improve or stabilize. Nearly 38% of the credit scores rose, while 34% had the same credit score in June that they had the month before. That compares to 32% who had the same credit score in May as they did in April. About 28% of those surveyed saw a decrease in their June credit score. Credit Karma reported last week that the average consumer credit card debt at the end of June declined by $134 from the first quarter. Based on the credit histories of more than 44,000 of the company's customers, the average consumer with debt had:
* $6,938 in credit card debt; * $206,427 in home mortgage loans; * $54,370 in home equity loans; * $14,539 in auto loans; and * $27,201 in student loans.
Midwesterners had the lowest amount of debt.

30 of Internet users go online to manage finances

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NEW YORK (7/20/09)--Thirty percent of U.S. Internet users recently surveyed say they go online to manage their finances. That sounds like a lot, but don't get cocky. In the scheme of things, "managing finances" isn't a popular reason to log on. In fact, it is No. 19 on a list of 21 reasons to go online. The Ruder Finn Intent Index, conducted in second quarter 2009 by the Ruder Finn public relations agency, found that the No. 1 reason to go online was to "pass the time." Of those surveyed, 100% said this was a reason they log on (eMarketer July 17). Other top reasons: educate oneself (96%), connect with others (92%), research (89%) and share (86%). The least common intentions for logging in--and here’s where credit unions may need to do a little more marketing--were to make purchases (33%), manage finances (30%), comparison shop (28%) and join a cause (26%). "Intent is the new demographic," said Kathy Bloomgarden, co-CEO of the research firm. "Delving deeper into the underlying motivations of online behavior is critical to developing proactive strategies. Just being online is not enough to leverage digital channels to drive business imperatives. Audiences must be targeted upon their intent," she added. Roughly three in five Americans (63%) log on to influence others' opinions or express contrasting or oppositional views, while 72% go online to become part of a community. Eighty percent go online to socialize--twice as many as those who log on to shop online or do business. Online business isn't dead, but marketers who can't connect with their consumers' intent do so at their own peril, said the firm in a press release. Ruder Finn divided the responses into six categories, from most common to least common:
* Learn; * Have fun; * Socialize; * Express oneself; * Advocate; * Do business; and * Shop.
Of those surveyed, men were more likely to go online for business, entertainment and to keep informed on news and current events. Women were more likely to log on to advocate for a cause or issue, express themselves and socialize. For more information, use the links.

12 N.J. CUs signed up for private student loan network

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HIGHTSTOWN, N.J. (7/20/09)--Twelve credit unions in New Jersey have signed up so far for the New Jersey Credit Union League's private student loan network. The dozen credit unions have available more than $60 million in lending capacity, said the league in its newsletter, The Daily Exchange (July 16). The network launched in mid-June with nine credit unions and more than $42 million available for lending. So far, 435 applications have been received for almost $5 million in loan requests, the league said.

Ark. foundation establishes scholarship fund in Strouds name

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LITTLE ROCK, Ark. (7/20/09)--The Arkansas Credit Union League has established a scholarship fund in the memory of Karen Stroud, league education director, who died July 5. Stroud died after a five-month battle with brain cancer. She had worked at the league since June 2004. The Karen Stroud Memorial Scholarship Fund for CU at the Top will be used to help future credit union leaders attend a year-long leadership school Stroud was instrumental in creating this past year. She began working on the program last summer and created the curriculum with the league’s Education Task Force. “This was Karen’s dream job,” said Reta Kahley, Arkansas league president. “She loved the credit union people and the movement so much; the scholarship will be a great tribute to her.”

Virginia CUs report fin ed activities

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RICHMOND and PORTSMOUTH, Va. (7/20/09)--Several Virginia credit unions have offered financial education programs in the state. One credit union reached more than 3,000 youth and adults during the second quarter. Virginia CU offered seminars to 3,082 people. Seminar topics included:
* Today’s Economy; * Building a Better Budget; * Strategies for Eliminating Debt; * Raising a Money Smart Kid; * Solving the Mystery of Credit Reports; and * Information for First Time Homebuyers.
The seminars were offered at public libraries, workplaces and at the credit union. Youth accounted for more than half of the 3,082 participants from April to June. Virginia CU Education Director Cherry Hedges developed curricula for high school and college students that covers the basics of budgeting, saving, borrowing, careers and what to know before making a major purchase. Guardian FCU, Portsmouth, offered a three-hour financial literacy workshop Thursday at the credit union. Teens attending the workshop learned how to fill in a check register and budget their money, and the difference between fixed and flexible expenses (Virginian Pilot July 17). Jackie Cross, Guardian’s financial counselor, used games and financial lessons to teach the students. In one game, students received 20 beans that they had to allot for expenses. Cross then told students that they were in a recession and had to eliminate seven beans. The students suggested cutting back on food and recreation to make up for the loss, the newspaper said. Chris Anuswith, president/CEO of the credit union, said schools and parents are not teaching financial literacy and it is more of a problem than computer illiteracy. If people were more financially literate, there may not be a mortgage crisis or problems with credit cards, Anuswith told the newspaper.

Pa. Calif. CUs stand ready to aid state workers

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HARRISBURG, Pa. (7/20/09)--Pennsylvania and California credit unions are preparing to help state workers who are not receiving paychecks due to their states’ budget impasses. About 25 Pennsylvania credit unions have created special programs to help state workers, according to the Pennsylvania Credit Union Association. Some of the programs include low- or no-interest loans, skip-a-payment, and Credit Union Better Choice loans (Life is a Highway July 17). Some state employees did not receive a paycheck Friday. Others received 70% of their pay. Bellco Community CU, Harrisburg, Pa., has helped 30 state employees so far. The credit union is offering an interest-free loan to help state workers. The loans have zero percent interest during the budget impasse and for 60 days after the budget is signed by the governor. A $1,000 line of credit is available on each pay date affected by the impasse, the credit union said in a release. California is facing a $26 billion deficit. Earlier this month, the state began issuing IOUs, or registered warrants, to businesses and others that were set to receive state payments (Bloomberg July 17). Nearly 90 credit unions in California are accepting the warrants, according to the California and Nevada Credit Union League’s website. Some financial institutions in California, such as Bank of America, Chase, Wells Fargo and Union Bank have set deadlines for accepting the warrants, but credit unions have not (News Now July 7). The failure of California’s negotiations between the governor and the lawmakers on the budget mean the state’s bonds ratings will be reduced to junk bonds--meaning the state would not be able to borrow funds.

N.Y. governor signs CU-friendly wild card bill

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ALBANY, N.Y. (7/20/09)--New York Gov. David A. Paterson signed a “wild card” extender bill July 11 that expands the authority of New York’s state-chartered credit unions to exercise the powers of their federal counterparts without first amending the law. Wild card legislation was a priority issue on the Credit Union Association of New York’s agenda, the association said. The powers effected are authorized in a resolution adopted by the New York State Banking Board. The legislation passed the New York State Assembly June 4 and the Senate June 30 in an extraordinary session. The bill was sponsored by the Senate Banks Committee Chair Brian Foley (D-Long Island) and Assembly Banks Committee Chair Darryl Towns (D-Metropolitan). It extends for two years the sunset provisions now applicable to the “wild card” banking law. The current law was set to expire Sept. 9. The “wild card” law was originally enacted in 1997 to provide competitive and regulatory parity between New York state-chartered banks and their federal counterparts. “The association extends its gratitude to Foley and Towns for their sponsorship of the legislation in their respective houses, and of course to Gov. Paterson for recognizing the importance of this legislation and signing it into law,” said William J. Mellin, president/CEO of the association.

Carolinas foundation donates 21000 to kids hospitals

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GREENSBORO, N.C. (7/20/09)--The Carolinas Credit Union Foundation has donated $21,000 to the Children’s Miracle Network as a result of funds raised through the Credit Union Cherry Blossom run. The donation will help seven children’s hospitals in North and South Carolina, according to the North Carolina Credit Union League. The foundation has given away millions of dollars to assist nonprofits that work with children (Weekly Update July 16). The hospitals benefiting from the donation are:
* Duke Children’s Hospital, Durham, N.C.; * Levine Children’s Hospital, Charlotte, N.C.; * University Health Systems Children’s Hospital, Greenville, N.C.; * Palmetto Health Children’s Hospital, Columbia, S.C.; * Medical University of South Carolina Children’s Hospital, Charleston, S.C.; * McLeod Children’s Hospital, Florence, S.C.; and * Children’s Hospital of Greenville, S.C.
“Credit unions have individually been involved with these hospitals in a variety of ways, and have shown their commitment to the community in the process,” said John Slack, president/CEO of the foundation.

CU System briefs (07/17/2009)

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* DES MOINES, Iowa (7/20/09)--The Iowa Credit Union Foundation (ICUF) recently received the 2009 State Partnership Award from the Iowa Community Action Association (ICAA). The award recognizes the foundation's leadership and collaboration with ICAA and community action agencies around the state to promote the Individual Development Account (IDA) Program. In 2008, ICUF launched the Credit Union Family Partnership IDA Program, which matches the savings of low-income Iowans. The savings and matching funds must be used to: purchase a specific asset such as a home, start or expand a small business, pay for education or job training, or purchase a vehicle to get to work. The program has nine pilot credit unions. Pictured, from left, are Lana Ross, executive director of ICAA; Marybeth Foster, executive director of the foundation; and Arlene McAtee, Mid-Iowa Community Action Inc. (Photo provided by the Iowa Credit Union League) … * WINSTON-SALEM, N.C. (7/20/09)--Truliant FCU, a $1.2 billion asset credit union based in Winston-Salem, experienced a 32% increase in the number of mortgages it closed for June, compared with June 2008 (Carolina Newswire July 15). Troy Martens, vice president of consumer and real estate lending for Truliant, said the uptick in business is due to two main factors: "we have very competitive rates, and our members know that our goal is to put them in a loan that they can actually afford" … * HERNDON, Va. (7/20/09)--The Northwest FCU Foundation awarded more than $87,000 in scholarships at its 2009 annual ceremony and luncheon. Twenty students from across the country were honored. They included 15 recipients of the $5,000 Ben DeFelice Scholarship, two of which were sponsored by Northwest Financial LLC, and five recipients of the $2,500 CIRA Scholarship, sponsored by the Central Intelligence Retirees Association. The DeFelice scholarship is named for the credit union's longest serving volunteer board member. Shown with the scholarship winners with Gerrianne Burks, president/CEO of the foundation, and Juri Valdov, vice chairman of the foundation's board. (Photo provided by the Northwest FCU Foundation) …