Debit Cards and Your Credit Score

The world of credit scores and credit history can be confusing. A common question from members of one of Dallas’ best credit unions, GO Federal Credit Union, is what effect, if any, debit cards have on your credit.

The answer is: they don’t have any impact on your credit for the most part. Standard debit cards do not affect your credit score or show up in your credit history because debit cards aren’t extending a line of credit. When you use your debit card, money is immediately withdrawn from your bank account. When you use a credit card, charges are applied to an account, and you received a bill at the end of the month to make payments on those charges.

Exclusively using debit cards means that you will not go into debt. However, the downside is that you aren’t building up any credit history. This may negatively impact your credit score.

Prepaid debit cards work similarly to regular debit cards. They store money on an account, but you aren’t borrowing money from anyone to use them. This makes credit bureaus uninterested in the use of prepaid debit cards.

Yes, some prepaid debit card companies do report your history to the credit bureaus. It is important to understand that this doesn’t affect your credit score the same way credit cards do.  If they report your use to the credit bureaus, all it shows is a history of your payments. This report does not actually impact or help your credit score.

GO Federal Credit Union offers the GOFCU Visa Credit Card. By getting a GOFCU Visa Credit Card, members receive lower interest rates and no annual fee, no cash advance fee, and no balance transfer fee. And to assist with the transition from a debit card to a credit card to help increase your credit score, GOFCU allows members to set-up automatic payments from their GOFCU account, make payments using GOFCU online banking, or stop by their nearest GOFCU branch.

Federally insured by NCUA and Equal Housing Lender

Credit Unions Vs. Banks

If you're debating between a credit union or a conventional bank, it’s important to keep in mind the vital distinctions such as rates of interest and branch accessibility to identify which elements are essential to you. Let’s list some primary differences below to help you decide which is the right choice for you.  

The Important Distinction

On the surface, banks and credit unions may appear very similar. After all, both are equipped to accept those convenient automatic deposits. Both are also able to provide people access to checking and savings accounts, credit cards and loans. The differences lie at the very core of the operations, and they’re significant. Banks are for-profit institutions that generally strive to earn shareholders money. Credit unions are not-for-profit, member-owned cooperatives. Essentially, account holders are a means to an end for banking institutions. At credit unions, members are served each and every day. Credit unions exist to offer a group of individuals linked by a certain bond which might be based upon location, company, belief, subscription, or various other variables.

Considering the fundamental differences between banks and credit unions, members of a credit union are likely to find a high level of service is provided to them no matter how much – or little – money is placed into an account. Credit union membership also tends to provide individuals with benefits that go beyond service, including:

•             Higher interest rates on deposit and investment accounts – Credit union members typically receive a higher return on their financial investments, such as savings accounts and certificates of deposit. Since credit unions work on members’ behalf and not shareholders, profits made benefit members directly.

•             Low interest rates on credit cards and loans – Credit unions are also generally able to provide their members better rates on money borrowed. Since credit unions do not have to earn huge profits to satisfy shareholders, they reinvest money earned for their own members. Oftentimes, that reinvestment translates into lower rates.

Making the Best Decision for You

People have many choices on where to put their hard-earned dollars. Credit union membership provides a distinct advantage for people who wish to enjoy a higher level of service and greater value attached to the financial accounts they hold. From lower rates on loans to higher earnings on savings, credit unions are all about serving their members.

Federally insured by NCUA and Equal Housing Lender

The Importance of Understanding Checking vs. Savings Accounts

When opening an account at credit unions in Dallas, you will be given choices for different checking and savings accounts. Knowing your choices will help you receive benefits from each of them.

What is the Difference?

GO Federal Credit Union in Dallas will be able to give you the information that is needed so that you can choose which account will work best for you.

·       Your Checking Account: GOFCU offers a variety of checking account options. Each account features terrific benefits including FREE online bill payment, FREE Home Banking, FREE audio response (Touch & GO), FREE E-Statements, FREE online check viewing and more. These accountsare transactional. Your everyday spending money is what belongs in these accounts.

·       Your Savings Account: GOFCU offers a variety of savings options to meet the needs of every member. All savings accounts earn competitive dividends and are federally insured up to $250,000 by the NCUA. With these accounts, earningdividendslets your money make you more money! These accounts are not transactional. You should use them sparingly and mainly add to it and forget it’s there.

The Benefits

Having checking accounts at a Dallas credit union like GO Federal is the best way to keep up with your money. It is advised and encouraged that you have both a checking and savings account. They both do different things that work together to benefit you as much as possible.

You can also get help from GOFCU so that you know where to place your money and how to easily access it. But the most important thing is to understand that your checking and savings accountscan work together. GO Federal Credit Union is here to help improve the financial well-being of its members.  

Federally insured by NCUA and Equal Housing Lender 

Credit Unions and Your Credit Score

Opening a checking or savings account with a credit union is a smart way to manage money and establish creditworthiness with a financial institution. If you are tracking your credit score, you may be concerned that opening an account may impact your credit score. 

How Do Credit Unions Impact Credit Score?

Overall, credit reports track debt to income ratios, on-time payments and how much debt you have on your credit cards in relation to your credit allowance.

If you have a credit union account, the following will not appear on your credit report:

·         Withdrawals or deposits

·         Closing an account

·         Check writing

·         Multiple Accounts

Two Instances Which May Impact A Credit Score

1.       Credit unions may pull your credit report when you first open an account. This could result in a soft pull which does not impact your credit score. A credit union may do a hard pull which is usually performed if you are applying for a loan. If a hard pull is done, this may impact your score for up to 12 months and may minimally reduce your credit score. 

2.       Check overdrafts are defined as a payment request coming through, but there are not enough funds to cover the payment. Typically, acredit union will cover the charge, but apply a fee for the overdraft. These do not appear on your credit report, if you bring your account to current and pay the fees.

Managing your credit report is essential for a future home, auto, or personal loan. Always ask questions to confirm your understanding to make the best financial decision for your financial goals.

Federally insured by NCUA and Equal Housing Lender

A Credit Union: A Gift that Keeps on Giving for 20- and 30-somethings

In Your 20’s You Are Earning Money for the First Time. A Credit Union can Help You Save Into Your 30’s for Big Purchases  

Young people in their 20’s and 30’s have received a bad reputation for doing everything on the Internet and doing very little in their communities. A credit union in Texas helps young adults remain active in their communities by giving great benefits, including saving money from a job that can help support a family. Most people in their 20’s are earning a living for the first time after graduating from a 2-year or 4-year college. The great thing about earning a living is the feeling of financial independence it gives to recent college graduates. However, many people in their 20’s start out making minimum wage, so their earnings go directly into living expenses with very little left over. This is where credit unions can help give young adults a place to save their money. 

Credit Unions Give Young Adults Better Savings Rates

It is well known that young adults need to save money. There are several significant expenses that come in the late 30’s and early 40’s as young adults enter middle age: buying a house, buying a car for the family, and starting college savings account for growing children. A credit union can help young adults start a savings account with a higher interest rate than is typically offered by a for-profit bank. As young adults enter middle age, the magic genie of compound interest starts to make this savings account grow until, 20 years later, it offers a golden pot at the end of the financial rainbow. 

Credit Unions Help You Save for the Future

A credit union offers a savings account that will compound over the years. As a 20-something adult makes money from a job and puts some of it into a savings account every month, the savings account will grow substantially.  This is because credit unions funnel their profits back to their members through better dividends and lower interest rates for their members.

The great feature of saving even small amounts per month, is that it is doable for even a 20-something with the help of a financial advisor at your credit union. These benefits are generally not available through a savings account at a traditional bank. If you are in your early 20s or 30s, you can start saving now. Then, when you’re ready, you can buy a home through a Texas credit union mortgage loan offering better rates than most banks.

Federally insured by NCUA and Equal Housing Lender

Seven Reasons Why People Like Credit Unions Better For Home Loans

Considering buying a home? If so, you will want the best home loan you can find. The place to look for that perfect loan is no farther than GO Federal, a Dallas credit union. Reasons to consider a credit union over a bank will become evident after you read this!

1. Credit unions in Dallas are small entities. Unlike the larger corporate banks in town, credit unions are community focused. Their members are their customers. This is not forgotten in the member service experience.
2. Banks and credit unions do follow the same laws regarding lending practices. The difference is the relationship. Because Dallas credit unions are smaller, they build strong relationships with their members. 
3. The needs of the people are at the forefront of a credit unions business model. Because they are working for a specific geographic group, they understand the needs of their members. This understanding allows credit unions to guarantee members get a loan that will provide the best benefit for each member. 
4. Banks will approve a home loan and then sell that loan to another financial entity once the underwriting is complete. Credit unions in Dallas keep their loans within their own portfolio. This keeps members from dealing with the stress of wondering why their payments now go to a bank they have never heard of. 
5. Credit union profits always transfer back to their members. Unlike banks, Dallas credit unions are able to offer lower loan rates because profits are transferred back to their members through better loan rates, higher interest paid on savings accounts and better credit card rates.
6. Approval of a home loan is more likely at a credit union because credit unions will look at the overall package, not just a credit score. 
7. Credit union members are loyal because they are treated like family. Bank customers will always be searching for a better option. A side note to consider; a credit union has yet to need a federal bailout. 

To answer the question of are credit unions better than banks for a home loan is your choice, yes or no, but there are many benefits of credit union membership to consider.

Federally insured by NCUA and Equal Housing Lender

Is a Credit Union a Good Place for Loans?

So, you need a loan. There are two options that you know that you can take advantage of; the bank or a credit union. You have started to go through the pros and cons, but the main question that you need to answer is why should you borrow with a credit union instead of a bank?

Exceptional Member Services
GO Federal Credit Union in Dallas County is known for having exceptional member services which makes people feel good about using GOFCU for their loan needs. If you are not already a member, you can easily become a member with GO Federal Credit Union if you live, work, or worship in Dallas County. Once you become a member, a representative can discuss the different types of loans available for your needs.

More Generous Terms
The cost of borrowing money to buy a home, an automobile or anything else will likely be much less for credit union members. This is because credit unions charge their members lower interest rates than traditional financial institutions do. Credit unions don’t have shareholders to please with massive earnings reports. It is their mission to help their members get more from their money. This means the cost of loans tendto be lower, interest returns on savings are likely to be higher and the terms of obtaining credit may be less stringent for members.

When looking for ways to make your money go farther, you will find that GO Federal Credit Union provides a way to do so. Come in and speak with a loan specialist today at one of our branches. Call us at 214-742-6551 or visit us online.We look forward to talking with you and helping you reach your financial goals.

Federally insured by NCUA and Equal Housing Lender