PLACEHOLDER

How is my credit score calculated?

 This question is one of the most frequently asked by members. Credit scoring is a closely guarded and proprietary product.  Fair Isaac owns the rights to a credit scoring model called FICO.  It is used by credit reporting agencies and tells a lender how likely a person is to repay a loan and make payments on time.  Simply, scoring identifies risk.

 Is your credit score important?  Yes, it is, but it is not the only aspect of the credit decision process made by credit granting companies.  Lenders look at a variety of information such as your employment, ability to repay the loan, collateral and the current economic environment.

 Here's a brief summary of FICO score factors and estimated percentage of your score in the category

Payment history                                                                                                          35%

        Have you repaid prior obligations such as credit cards, installment (auto) and real estate loans?

        Public records include collections, judgments and bankruptcy?

        How late are your payments - 30-60-90 or more past due?

        How many accounts have good payment history?

Amounts owed                                                                                                            30%

        Owing a large amount of money may indicate that you are overextended.

        The amounts owed on different accounts including credit cards or auto installment loans.

        The number of accounts that have a balance; a high number indicates possible     over-extension.

        How many accounts have a balance; again, a high number raises concerns

        Have your installment loans been paid down?

        How long have your accounts been opened?

Length of credit history                                                                                               15%

        How long have your credit accounts been established, in general?

        How long has it been since you used certain accounts?

        How long have specific credit accounts been established?

New Credit                                                                                                                  10%

         How many new accounts do you have?

         How recent have the accounts been opened?

         Do you have an excessive amount of credit inquiries by credit firm?

Types of credit                                                                                                            10%

         A good mix of credit accounts is good; too much of one type can be problematic.

Summary

         Credit scores from each credit report agency only considers data in your credit report history.  The range of credit scores
         typically is 300 - 850.  And remember, the higher the score, the lower the risk.  There is no single "cutoff" score that is   
         used by lenders.

         KaiPerm uses several other factors in the credit decision process.  For one, your relationship with the credit union is very
         important.  Direct Advantage members, for example, receive a two percent discount from the normal stated interest rate on
         credit union loans!

         Importantly, the credit union does not "risk rate" borrowers.  Members receive the same interest rate; KaiPerm is a cooperative
         and it's our philosophy that all members receive competitive rates on their loans.

 Need help or have questions, give us a call.  We are here for you and to help you Get Ahead Financially.

Recent newspaper articles and internet posts are educating consumers about the safety of their financial institution.  Non-performing loans, poor investments and low net worth ratios all combine for real concerns about the financial services sector. 

KaiPerm’s Board of Directors and management want to assure its members that your credit union is doing well.  Sure, there are challenges in this economy.  And,  in some ways, KaiPerm mirrors what our members are doing to survive this difficult economy. The credit union is watching expenses, limiting capital expenditures to a minimum and keeping excess cash working with a conservative and prudent investment strategy.  At the same time, KaiPerm is making loans.  In fact, our philosophy has always been to look for ways to make loans to our members.

How safe is KaiPerm NW Federal Credit Union

KaiPerm is a well capitalized federally insured credit union.  Your funds are safe and insured up to $250,000 for individuals by an agency of the federal government, the National Credit Union Administration.  Deposits can be structured to be federally insured up to $1 million for a family of four.  In addition, your retirement funds are also federally insured to up $250,000.

Why are some credit unions discouraging deposits?

A recent Oregonian newspaper article cited a local credit union which asked members to take “investment money” elsewhere. Why would any financial institution do such a thing?  Some credit unions are employing a “withdrawal strategy” to reduce the amount of deposits.  Frequently, higher paying certificate of deposits are used to fund loan requests.  In a turbulent environment, demand for loans is low – so there is not a need to keep high paying certificates or other member deposits to fund loans.

Another primary reason for reducing deposits is to improve the financial institution’s net worth ratio.  Net worth is the ratio of reserves (numerator) to assets (denominator).  By lowering assets, the financial institution improves its net worth ratio. Net worth is a key ratio used by bank and credit union regulators to determine the soundness of a financial institution.

Is KaiPerm making loans?

Yes, the credit union is actively making loans.  That’s what we do (along with taking in member deposits).  KaiPerm’s loan service levels are excellent.  The credit union has not had to cut back employee hours, furlough employees or lay off anyone.  Loan rates are very competitive and we provide one-day service for consumer loans and two week service for real estate transactions.

Another benefit of KaiPerm membership is that our loans are priced the same for all members for Direct Advantage (DA) members.  There are no “risk rated” interest rates because of a low credit score!  Your credit union is a not-for-profit financial cooperative so members all receive the value of low rate loans.