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Pay Down Past Due Accounts
Any amounts that are past due destroy your credit score. Work at paying down past due balances as soon as possible; then normal payments can be made and will refl ect paid on time. Any charge offs or liens within the past 24 months damage your credit score. Work at paying these as quickly as possible.
Check Your Limits and Distribute Balances
Make sure your credit card company reports your credit limit to the credit bureau and then keep your card balances at 50percent of that limit or below. Anything over 70 percent of your limit damages your credit score.
Don’t Close Your Credit Cards, Keep Old Cards Active
Keep the number of credit cards you have between three and five to better your credit score. If you need to close some, the newest cards are the ones to close. People that have credit for a longer period of time are assumed to be at less risk of defaulting on payments. Use the old card at least once every six months to avoid it moving to inactive.
Call to Eliminate Late Payments from Your Credit Report
Once you become current on any late payments, contact all creditors that have reported the late payments to the Credit Bureau and request they be removed. Persistence and politeness usually result in success on this one!
Eliminate Collection Accounts
Not all collection agencies will do this but many will, and it is well worth your effort to try. When you are getting ready to pay off a collection, contact the collection agency and make arrangements to pay it off with the condition they remove all reporting from the credit bureaus. Request a letter from them that states this agreement.
FDIC Deposit Insurance Coverage
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects against the loss of insured deposits if an FDIC-insured bank or savings association fails. FDIC deposit insurance is backed by the full faith and credit of the United States government. Since the FDIC was established, no depositor has ever lost a single penny of FDIC-insured funds.
Pick up a paper, or listen to the quick bursts of news on TV or radio, and what you get are reports of a housing crisis and financial turmoil, which only intensifies on the rare occasion that a bank fails. As a financial consumer, this can be alarming.
Let’s set the record straight: The banking industry is safe and sound. And, your account in commercial banks, thrifts and savings banks carry FDIC insurance. That means your account in a federally insured bank is protected up to $100,000, with additional protection for joint accounts, and $250,000 for a retirement account. The FDIC Web site (www.fdic.gov) provides you with more information on account coverage.
In addition, Iowans need to know that their local banks are highly capitalized and prepared for the economic fluctuations that naturally occur in the economy. In fact, the FDIC reports Iowa banks hold over $9 dollars in capital for every $100 in assets. Well above the national average and regulatory requirements. As of March 2008, the banking industry held $1.36 trillion in capital, providing an important cushion from which to absorb any losses.
The Iowa Division of Banking reports that 95 percent of Iowa’s state-chartered banks are rated in the top two categories, on a scale from one to five, when evaluating bank management, capital, earnings and liquidity. And, those few with lower ratings are taking appropriate corrective actions.
The federal government is also taking steps to address concerns in the housing and financial markets.
The Federal Reserve and Treasury Department have announced actions to stabilize Fannie Mae and Freddie Mac, whose capital levels remain strong despite the drop in their stock prices. These two Government Sponsored Entities (GSEs) are the two largest mortgage buyers in the country. They were created by Congress in 1970 to buy mortgages from lending institutions and then either hold them in investment portfolios or resell them as mortgage-backed securities to investors. The two entities have issued the vast majority of mortgage securities sold in the last six months because investors have lost confidence in the deals put together by large investment banks.
As for the housing market, the turmoil does not appear to have significantly impacted the Iowa mortgage market. We have a pretty good story to tell. In the first quarter of 2008, Iowa foreclosure starts were less than 1 percent (0.63 percent), ranking the state 32nd in the country. Eighty-three percent of mortgage loans in Iowa have been made to prime borrowers, and only 7 percent subprime loans. Subprime adjustable rate mortgages (ARM) loans are where the bulk of the problems are nationwide. In Iowa, only .03 percent of mortgages fall in that category. Despite the low numbers of subprime loans, homeownership in Iowa is higher than the national average – a good indicator that Iowa lenders are providing borrowers with financing appropriate for their net worth, income and borrowing capacity.
Iowa banks continue to be strong and stable and will continue to invest in their local communities. This crisis will pass, as have all others, and the result will be a stronger financial system with fewer unregulated players.
John K. Sorensen
President & CEO
Iowa Bankers Association
The recent news of turmoil in the banking industry has been overblown. Fears of a financial meltdown have been brought about by a few troubled banks, some of which are due to the mortgage crisis in some states and questionable lending practices. SOSB wants to provide some resources and a brief explanation on what FDIC insurance is and who is protected. South Ottumwa Savings Bank is FDIC insured to protect our customers financial security. This information is being put forth to ease any concerns you may have or clarify your FDIC protections.
What does the FDIC insure?
Certified checks, letters of credit, and travelers' checks, for which an insured depository institution is primarily liable, also are insured when issued in exchange for money or its equivalent, or for a charge against a deposit account.
For more information and Frequently Asked Questions on this subject, please visit the FDIC website here. And, of course, if you have any questions, do not hesitate to contact any of our loan officers or bank representatives.
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