Lutheran Federal Credit Union Blog

Owning vs. Renting a Home: How to Decide What’s Right for You — Lutheran FCU

Lutheran FCU — Fri, 03 Apr 2026 13:30:00 GMT

The average person moves residences about 11 times in their lifetime. That provides a lot of opportunity to confront the following question: is it better to own your home or to rent it? It’s a huge decision that affects your lifestyle as much as it does your finances, and the answer will vary depending on who you ask. There are compelling arguments to be made for both sides and the resulting advice—though well-intentioned—can quickly become confusing and contradictory. So, is paying rent really just a waste of money? Or is it true that you can make more money by renting than by owning a home? Take a closer look at six snippets of common owning-versus-renting advice:

Better off buying

“Owning a home is an investment”

While it’s true that you can profit from the eventual resale of your home, homeowners who offer this advice often imply that owning a home is the best investment. Although some real estate ventures do pay off, owning a home is not a guaranteed investment. Historically, housing prices tend to increase only slightly more than the level of inflation and are often outperformed by other investments such as stocks. Your property’s value can also be influenced by factors completely outside of your control, like the market value, the desirability of your neighborhood and the demand for housing in your city. Furthermore, when evaluating their investment, homeowners tend to compare the current value of their home to the original purchase price only and, in doing so, ignore all the money they’ve spent on interest, taxes, insurance, repairs, maintenance and improvements over the years. The result is a distorted view of their return on investment. A better approach is to think of your primary residence as your home first and foremost and not strictly as an investment. Enjoy your time living in it and supplement home ownership with other investment types.

“By paying rent, you’re throwing your money away”

This advice usually comes from homeowners who place importance on home equity. Home equity is the portion of a home’s current value that the owner possesses. Every time a homeowner makes a mortgage payment, the portion of the payment that goes toward the principal of the loan increases the amount of home they own (and decreases the amount of home their lender owns). Every mortgage payment therefore contributes to a homeowner’s equity. By comparison, paying rent doesn’t seem to accomplish much—the entire payment simply goes to your landlord.

Just because you’re not building equity doesn’t mean you’re throwing your money away. Homeowners have a vested interest in building equity in their homes in order to someday profit from the value of their home. As a renter, you get to bypass all the stress and speculation that comes with treating your home as an investment. Your rent payment is simply the exchange of money for a place to live. If you find value in that exchange (however you choose to define it), then you’re not wasting your money.

“Mortgage payments are cheaper than monthly rent”

Depending on where you live, the amount you pay for monthly rent may be higher than the amount you would spend monthly on a mortgage for a similar property. The comparison might entice you with visions of owning a home, but it doesn’t paint the complete picture. As a homeowner, your mortgage payments represent only a fraction of your monthly spend. When you average out property taxes, insurance, homeowners association fees, and repair and maintenance costs, the monthly price of home ownership jumps up significantly. Comparing mortgage payments to rent payments without factoring in additional costs can be misleading.

Better off renting

“Renters don’t pay taxes, insurance or maintenance costs”

While it’s true that your expenses are considerably simpler as a renter—rent, utilities and contents insurance usually covers it—you’re not completely shielded from the costs associated with home ownership. As a renter, you don’t have to pay for property taxes or major repairs—but your landlord does, and your landlord can pass those costs on to you by increasing your rent as the months and years go by. When you rent your home, you get to skip paying for things like taxes and repairs upfront, but keep in mind that those costs can still affect your finances in the long term.

“Renters make more money in the long run by investing the money they would otherwise spend on a mortgage”

This advice is the renting counterpoint to treating your primary residence as a way to grow wealth (see “Owning a home is an investment,” above). Some renters will proudly declare that, by investing the difference between their monthly rent and what a monthly mortgage payment would cost them, they stand to make more money in the long term than homeowners. While this can be the case, it’s not always the case. The main challenge is ensuring that the money actually gets invested—it’s very easy to take the money you save by renting and spend it on goods and services instead.

“You can’t afford to own a home without saving up a down payment of 20%”

Affordability seems like a compelling reason to choose renting over owning a home. Buying a home is expensive and requires a large amount of capital upfront. That said, your ability to come up with a 20% down payment is not an accurate assessment of whether or not you can actually afford to buy a home. It’s possible to make a large down payment, and then fail to keep up with your mortgage payments. Furthermore, even though a large down payment has its advantages, you can still purchase a home with only 5% or 10% down. Don’t assume that home ownership is out of reach simply because you don’t have that 20% saved up yet.

Seeing past the advice

When your friends and family offer you advice on renting and home ownership, they truly want the best for you. However, whether it’s better for you to rent or buy a home ultimately depends on a completely unique combination of your financial situation, your personal goals and a long list of variables, including your geographical location. Do you need the mobility that renting provides you with, or are you ready to settle down for the foreseeable future? Does having the ability to customize and renovate your property justify the added expense of home ownership? Does your home need to be within a certain range of your workplace, school or other commitments? Is your home more of a sanctuary, or just a place to rest your head? By taking the time to fully understand your needs and your priorities, you’ll be able to cut through the conflicting advice and make the decision that’s right for you.

When Should You Refinance a Home Loan? | Financial Education Friday — Lutheran FCU

Lutheran FCU — Fri, 27 Mar 2026 15:30:00 GMT

Is refinancing your home loan the right choice for you?

Do one thing: If you are considering refinancing, research and get quotes from several lenders (at least three) to find the best rate before taking the plunge.

When Should You Refinance A Home Loan?

Since interest rates have fallen a bit off their highs, you may be wondering if it’s finally time to try and get a better deal on your mortgage.

The answer? It depends.

A refi is when you pay off your current home loan with money from a new, cheaper one. There are several reasons you might want to refinance a mortgage, including:

Lowering your interest rate and monthly payment
Reducing (or occasionally increasing) the length of a loan
Obtaining a fixed-rate mortgage to avoid paying more when an adjustable rate loan increases
Cashing out equity to pay for home renovations, high-interest credit card debt, or some other purpose

Daniel Masuda Lehrman, CFP, founder and lead financial planner for Masuda Lehrman Wealth in Honolulu, says he sees the main benefit of refinancing a mortgage for his clients as lowering monthly payments.

“The most common example is someone refinancing their high-interest 30-year fixed mortgage into a lower interest rate 30-year fixed mortgage, resulting in a lower monthly payment and total interest payments over the life of the loan,” notes Lehrman. “There are instances where refinancing a 30-year fixed mortgage into a 15-year mortgage may be beneficial, as it cuts the payoff time in half and significantly reduces the total interest paid. This scenario would make sense for someone who can afford the higher monthly payment and aspires to be debt free earlier.”

Do the Mortgage Math

Unfortunately, refinancing your current mortgage doesn’t come without costs. It typically can run between 2% and 5% of your loan. So, figure out what a refinance will cost you, then divide that number by the amount that you will save every month on the payments. The answer is the number of months you have to stay in the house to make the financial transaction worthwhile.

Let’s say you determine the cost of the refinance is $1000, and that translates into a savings of $50 a month. You would need to stay in your home for at least 20 more months. This means that if you have no plans for moving in the next two years, a refinance could make sense. But if you do plan to move and sell the home in less than two years, it’s likely not in your financial best interest to refinance.

Does It Pay To Refi?

Another way to determine if a refinance is worth the time, effort, and money is to look at how much you’re able to lower your interest rate. The rule of thumb used to be that it didn’t pay to refi unless you could lower your rate by at least two percentage points – say from 8% to 6%. That’s no longer true. Today, it can make sense if you can save as little as 1/2 or 1%. To figure out if the math works for you, take the cost of the transaction and divide it by the monthly savings. Think of the answer in months. If you expect to remain in the house longer than that number of months, it’s typically worth it.

Pay Attention To Your Credit Score

You also need to make sure your credit score is at least as high as it was when you took out the loan. If it’s considerably lower, you may not qualify for a better rate. On the flip side, if your credit score has improved over time, you could qualify for an even better (lower) rate.

Use an Online Calculator

Fortunately, there are several online mortgage calculators to help you determine how much you could potentially save by refinancing your home loan. And those who use the SavvyMoney tool can also see what refinancing a home loan would look like using their online banking dashboard.

Remember, though, these are only estimates, so the best way to get a clear picture of what a refinance will look like for you is to consult with multiple lenders, as mentioned above, to see who can offer you the best rate over the life of a new home loan.

Pro tip: Make sure to let the lenders know that you are shopping around for the best deal. There’s often wiggle room when it comes to the fees charged in a mortgage refinance.

Consider The Alternatives

And while there are benefits to refinancing, explains Filip Telibasa, CFP, owner and planner at Benzina Wealth, he has nudged some clients away from taking cash out of a first mortgage and instead suggested they apply for a home equity line of credit or home equity loan as an alternative.

“My pushback to that is when you are refinancing a mortgage, you are doing so (often) for a longer period – 20 or 30 years,” he explains. “I do like refinancing the mortgage but purely from the perspective of reducing the interest rate. If it’s a debt consolidation or for a home renovation, it makes more sense to use the home equity line or home equity loan because you are not exposed to the interest rate for as long.”

Guest post by Jean Chatzky
With reporting by Casandra Andrews

4 Questions to Ask Yourself Before Buying a Home — Lutheran FCU

Lutheran FCU — Fri, 20 Mar 2026 15:15:00 GMT

Asking the right questions is an important part of every financial decision you make, and home ownership is no exception. If you’ve been thinking about buying a place, preliminary research will turn up a long checklist of questions for you to ask at every part of the process. There are questions for your financial institution, questions for your mortgage broker and questions for your real estate agent. But what about the questions you should be asking yourself?

Owning a home is likely the largest financial commitment you’ll make in your life, and it’s easy to get caught up in details pertaining to debt-to-income ratios, the real estate market, current interest rates and amortization schedules. But financials are only a part of the picture. In order to make a truly smart decision, you need to acknowledge and accommodate some personal factors along with the financial ones. Asking yourself the following four questions will help you determine whether or not you’re ready to own a home:

1. Why do you want to own a home?

Seriously, why is owning a home important to you? (Don’t answer with what you think you should answer; be honest with yourself.) Are you looking to build equity? Does it just seem like something a “successful adult” needs to do? Do you see it as an investment? Do you think renting is somehow inferior to owning? Are you just fed up with your landlord? Do you see it as a symbol of your freedom and independence? Do you have a Pinterest board of home renovation ideas you’re dying to try? Do you think it’s something that all (insert age here)-year-olds should do?

There’s no “right” answer to this question (even though some reasons might be more frivolous than others). By simply observing what surfaces when you ask yourself these questions, you’ll get some insight into why you’re contemplating buying a home in the first place. Are your motivations fueled by practicality or insecurity? Is it something you want, or simply something that everyone else seems to be doing? You’ll be able to tell if you’re in it for the right reasons.

2. Are you okay with staying put?

To make the most out of buying a home, you need to be in it for the long haul (which, in this case, usually means at least five to seven years). There’s a reason why short-term home ownership isn’t a thing outside of those real estate flipping TV shows—it’s a great way to lose a lot of money. Your home, like any investment, needs time in order for its value to grow (and that growth isn’t guaranteed, by the way). By selling your home after only a couple of years, you’re at the mercy of real estate market swings and your home may not have increased in value enough to break even—especially when you factor in closing costs and other additional expenses that go along with buying a home. If the thought of staying in one place for more than one year makes you feel panicky, then it might not be the right time for you to buy.

3. Are you happy?

Stability is key when it comes to buying a home, and so anything that threatens that stability could also potentially cause some major headaches once you’ve signed the mortgage papers. Do you love what you do for a living? Do you have job security? Do you enjoy living in your neck of the woods? Is your personal life stable?

You don’t want to be in a situation where you purchase a home and then find yourself faced with the need to change things up. A career change, the start or end of a relationship or a sudden onset of wanderlust could all interrupt your plans to stay put and build equity. Of course, life can be unexpected even when you’re happy—but generally speaking, if you’re pleased with where you’re at, dramatic changes won’t be looming around the corner.

4. Is your savings account up for the challenge?

Have you done your homework and figured out how much home you can afford, based not only on the monthly mortgage payments, but also on all of the other expenses, such as property taxes, insurance, homeowners association fees, and utilities, to name just a few? Regular monthly expenses aside, home ownership can serve up all sorts of expensive surprises, and you’ll want to make sure your savings account is up for the challenge. Save up for inevitable home repairs and maintenance—the financial responsibility of maintaining a household (appliances, heating, plumbing and landscaping) can take new homeowners by surprise. You’ll also want to beef up your emergency fund so that you have some flexibility and can continue paying your mortgage if you suddenly find yourself with health or job troubles. If your savings are healthy, you’ll also want to consider budgeting for moving expenses, furniture, and home upgrades before making the move.

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On the surface, home ownership can seem like a smart and appealing option, especially if your mortgage payments work out to be lower than what you would be paying to rent. However, rushing into a mortgage can set you up for a ton of stress (financial and otherwise). Before you buy, check in with yourself to make sure that you’re well prepared, that the timing is right and that you’re doing it for the right reasons.

Money Tips for Teens: How to Build Smart Financial Habits Early — Lutheran FCU

Lutheran FCU — Fri, 13 Mar 2026 14:45:00 GMT

Tips to help your teen be savvy with their money.

If you have a teenager at home, hopefully, you’ve been teaching them good money habits for years. Now that they’re older, set them up for success throughout life with more in-depth financial goals. Here are some things to try with your teenager.

Learn How to Earn

One of the first money goals for your teen is to learn how to earn and manage their own money. Encourage them to apply for jobs so that they learn the process of working for a paycheck. If it’s their money — their spending and saving — they’ll be much more likely to take it seriously.

Learn How to Save

Teach your teen to set up a high-interest savings account. Shop around for the best options. Consider credit unions and online banks to maximize your interest savings.

Learn to Budget

Before they get that first paycheck, sit down with them and help them create a budget. Set up sections for fixed and discretionary spending. Be sure to include a section for savings, both long and short-term.

Learn to Set Goals

Now that the budget is in place, work with your teen to craft it based on their goals.

Maybe they want to save up to buy a car.
Maybe they want to head to the beach next weekend with their friends.
Discuss their long and short-term goals in detail, then make the budget align with them.

Do One Thing: Help your teen create a budget that works for them. It’s a simple yet vital financial tool that will serve them well throughout life.

Guest Author: Chris O’Shea

Understanding Paycheck Withholdings: How to Adjust Your W-4 and Keep More of Your Money — Lutheran FCU

Lutheran FCU — Fri, 06 Mar 2026 13:30:00 GMT

Understanding and Directing Your Withholdings

You just got your paycheck. Your eyes scan down the list of deductions and settle on the most important part—your take-home pay. You take that number and start subtracting your bills, your day-to-day purchases, or that expensive item you’ve got your eye on. However, hiding in the often-overlooked payroll withholdings, you may find some untapped potential.

Paycheck withholdings are a fact of life for most workers, but they aren’t set in stone. While it might seem like the right idea is to accept your withholdings as given and hope for a big refund at tax time, you’re better off taking a more proactive approach. With a closer look at your life situation and a touch of math, you can wind up with more pocket money and better financial well-being.

Learn the terms

You may have noticed that your pay stub is riddled with abbreviations. The first hurdle to get over when it comes to understanding your withholdings is to be clear on the terms. First, you have federal taxes (FT for Federal Tax or FWT for Federal Tax Withheld) and state taxes (ST for State Tax or SWT for State Tax Withheld).

You will also see some other abbreviated terms such as FICA SS. This abbreviation represents a paycheck withholding from the Federal Insurance Contributions Act or FICA, and the SS indicates that this portion of your check goes to Social Security benefits, which you can collect when you reach your mid-60s. You may also find FICA MED, indicating contributions to Medicare. Medicare subsidizes healthcare costs for people over 65, as well as those who collect Social Security Disability Insurance (SSDI) benefits. Sometimes these two FICA taxes will be grouped together on your pay stub, in which case it will just show up as FICA tax.

A handful of states also withhold State Disability Insurance (SDI), which covers people who can’t work due to temporary disability. Depending on your profession and your location, you may find other abbreviations to indicate further paycheck withholdings. You can always look them up yourself, but the surest bet is often to contact your company’s HR department and find out from the source.

Finally, you may also have noticed YTD amounts. The YTD stands for Year To Date, and shows the running total for each category within the current tax year. YTD amounts are useful for estimating your yearly income figures, and for comparing those figures to other years. If the YTD figures are not provided on your pay stub, you can always figure them out by adding together all of your paychecks for the year.

Manage the math

If you want to get your withholdings right, you’ve got to crunch the numbers. Luckily, there are numerous online withholding calculators that you can use to make the process quick and easy. Everyone—from the IRS to banks to tax service providers—has their own version, but the basic concept is the same. Using the figures from recent tax returns and pay stubs, you can calculate your estimated yearly income as well as the resulting withholdings, and then optimize your earnings.

Know your withholding allowances

The key to maximizing your take-home pay is to take full advantage of withholding allowances. Tax allowances are factored in when your employer calculates how much federal income tax to withhold from your pay. The more allowances you claim, the less money is withheld from each paycheck. Using a W-4 form, you can claim a variety of allowances depending on your marital status, number of dependents, property taxes, federal student loans, child care and more.

Typically, your employer will give you a W-4 form to fill out at the beginning of your employment, and sometimes each year thereafter. You should make sure any pertinent changes are reflected on an ongoing basis. You can always fill out a new W-4 form yourself when your personal financial situation changes in a way that impacts your tax allowances. Make sure to adjust your W-4 when you get married or divorced, have or adopt a child, get a second job, your spouse gets a job or changes jobs, or if you’ll be unemployed for part of the year.

Although it always seems best to get as much monthly take-home pay as possible, you generally want to use caution, and stay away from claiming too many allowances. If your employer ends up not withholding enough from each paycheck, you may end up with the nasty surprise of a large balance owing when you complete your yearly income tax return. Worse still, you could possibly be subject to penalties that will sting financially.

Free your refund

For many people, tax refunds are a bit of a guessing game. You prepare your taxes, send them off and wait, hoping for as many dollars as possible to come back your way. Although having a special yearly bonus can be enticing, it pays to remember that every dollar was yours in the first place. You work hard to earn what you make, so why wait a whole year to reap the rewards?

When you get a tax refund, that just means that the government has withheld too much of your pay, and is giving it back. You’ve essentially provided the government with an interest-free loan. You can make better use of that money month to month, when it’s properly invested, saved up for a rainy day or spent on purchases that help with your everyday needs. Plus, that way you can rest assured that you’re making the most of your income. Just imagine if your refund could be earning interest for you all year long, or just making your life better every day instead of showing up once in your bank account and likely disappearing quickly.

Taking on the Financial Affairs of a Family Member — Lutheran FCU

Lutheran FCU — Thu, 26 Feb 2026 13:15:00 GMT

Here’s a guide for those who may have to handle the estate of a loved one.

Do one thing: Encourage or help aging parents and loved ones draft a will and an estate plan to ensure their wishes are known and carried out.

Managing Money Matters for a Loved One

Stepping in to become a caregiver for someone you love can be meaningful and challenging at the same time, especially when that role also includes taking on their finances. And when your parent, spouse, or other family member dies, the work required to handle their estate can seem overwhelming for those who aren’t fully prepared – and even for many who are.

Importance of a Will

To make matters more complicated, research shows that a majority of Americans don’t have a will. A national survey conducted in 2025 found that:

Only 24% of U.S. adults surveyed reported having a will, a drop from 33% of respondents in 2022.
Adults with children younger than 18 make up the largest group of people without wills or other estate planning documents.

How to Handle the Finances of a Loved One

Fortunately, there are steps you can take to prep for the inevitable. Certified Financial Planner Igor Aronov, founder of FAR Financial in Brooklyn, NY, recently lost his father. In the months that have followed, he has navigated many of the issues that arise after a loved one passes. Here is some of his best guidance on how to handle the financial affairs of a family member before and after their death.

Plan Ahead: Have Conversations Sooner Rather Than Later

It’s important to talk to your loved ones about their wishes and to make sure you know where all of their financial papers are and how any online accounts can be accessed. As you begin to broach the subject of what needs to be accessible, it’s important to have a document – it can be a simple notebook or a computer spreadsheet – where all of that information lives.

“These can be very, very difficult and emotional conversations to have or to even think about, but they are absolutely necessary,” Aronov says. “One way to frame them is that they come from a place of love and care.”

Topics of Discussion for Older Parents

For older parents or family members who may not already have their financial affairs in order, the conversations need to cover a wide range of topics, including:

All money-related matters
Retirement and pension plans (where they are located and who has access)
Subscription services
Credit card balances
Utilities payments
Car notes
Insurance payments

Get Access to All Passwords

With the wide use of two-factor authentication, it’s important to have all user names, passwords, phone numbers, and email addresses associated with those accounts. (Keeping the email and phone of the person who died working and accessible to receive those notifications is hugely helpful!)

Lost or Forgotten Passwords?

If passwords or usernames have been forgotten or lost, now is the time to update the passwords together with your loved one to make accessing those accounts less complicated down the road.

Estate Documents Should be Prepared and Accessible

Here’s a list of estate documents that should be both prepared and accessible:

Power of attorney (POA) can become an essential tool for moving forward.
A will that is up to date and offers clear instructions is helpful, Aranov says, adding, “My father specifically wanted to be cremated, and it took some effort to persuade my mother to honor his wishes.”
If there is a trust in place, check to make sure all the directives are current.
Obtaining multiple copies of the death certificate is also a good idea.

Closing Credit Card Accounts

Aranov says closing credit card accounts before someone passes, if possible, is helpful. In his case, closing an account after his father’s death required the bank to have a copy of a POA on file, which needed to be faxed or mailed, which created quite a bit of work: “Ideally, it might be a good idea to take care of things like credit cards within a month after death,” he says, “to avoid dealing with any errant charges or even identity theft.”

Life Insurance and Annuities

Theoretically, filing a life insurance or annuities claim should be simple, notes Aranov. Some of it can be done electronically, though in his experience, the electronic application completely fell through the cracks. “I had to call the insurance company and had to fill out everything manually, and then emailed the completed forms to the company.”

Retirement Plans

In some situations, transferring retirement plans to a beneficiary can be more complicated than it should be. In his case, his father’s IRA account was transferred into his mother’s name. The account took some time for paperwork to be processed, and then neither his father’s old account nor a newly created account for his mom was accessible, he says. His father’s required minimum distributions stopped arriving, and it took more time and phone calls to set things right. Looking back, he says gathering this information ahead of time would have been helpful.

Car Registration and Insurance

If your loved one has a spouse, the car insurance and registration will need to be updated and changed to the surviving spouse’s name. Depending on the insurance company, the switchover can probably be done online or over the phone. Changing a car’s registration may mean a trip to the DMV.

Bank Accounts

For Aranov and his family, dealing with bank accounts was one of the easiest tasks. That was partially because some of the accounts were already in his mother’s name and partially because his parents had established relationships at their local bank. If you make sure a spouse or beneficiary’s name is added to an account before a loved one dies, it will likely be much easier to access funds when needed.

With reporting by Casandra Andrews
Guest Contributor: Jean Chatzky

4 Credit Score Myths Debunked (and What Actually Helps Your Score) — Lutheran FCU

Lutheran FCU — Fri, 20 Feb 2026 14:00:00 GMT

Credit scores are an area of personal finance that seem a lot more mysterious than they actually are. Many people believe that improving them is a matter of trial and error and, as a result, there’s a lot of “credit score advice” floating around that can end up doing more harm than good. Four common credit score myths have been rounded up and debunked below:

MYTH #1: You have no control over your credit score

There are a lot of factors that make this myth easy to buy into—credit bureaus keep their exact credit score formulas a secret, you can’t access your credit report whenever you’d like (not for free, anyway), and it’s possible to be financially stable and still have a miserable score. It’s OK to find credit scores confusing, but if you have an accompanying “there’s nothing I can do about it” mentality, ditch it right now! Your credit score is a reflection of your borrowing and repayment behaviors, and that means you have a lot more control over it than you think.

MYTH #2: There’s a “quick fix” for your credit score

Although junk mail and late night commercials try to convince you otherwise, boosting your credit score doesn’t happen overnight. The good news is that the things you can do to positively influence your score are simple and don’t require a lot of time (or even that much effort!)—but the trade-off is that you’ll have to be patient while waiting for your new good credit habits to take effect. Your credit score is more of a track record than a snapshot, so consistency is key.

MYTH #3: Checking my credit report will negatively affect my score

This myth comes from confusing two different types of credit score inquiries: hard inquiries and soft inquiries. Hard inquiries are made by lenders or credit card companies when you apply for a new line of credit (a loan, a new credit card or a mortgage, for example). Soft inquiries are made by you or by others for background check purposes (a potential employer or landlord, for example). Because hard inquiries suggest you might be taking on more credit soon, they usually lower your score by a few points. Soft inquiries, on the other hand, do not affect your credit score in any way. This means you have nothing to lose by accessing your own score—in fact, doing so will help you understand what your current credit activity looks like and how you can improve it.

Note: there are some situations (like renting a car or a landlord running a credit check) where either a hard inquiry or a soft inquiry can be made. In these cases, it’s a good idea to find out beforehand what kind of inquiry will be made so that you know what to expect.

MYTH #4: Opening or closing a bunch of credit cards will improve my score

Even though these actions are the complete opposite of each other, this myth is still widespread—and very misleading. This is because opening and closing credit cards affects several different aspects of your credit score.

Opening new credit cards gives you more available credit, which in turn lowers your credit utilization ratio. This is a fancy term for the amount of available credit you actually use each month. (For example, if you have one credit card with a $1,000 limit and charge $200 to your credit card that month, your credit utilization ratio is 20%). Lowering your credit utilization ratio is a good thing, so opening new credit cards to boost your score might seem like a solid strategy. But remember those pesky hard inquiries? Opening a bunch of new credit cards means a sudden increase in the number of hard inquiries. Each hard inquiry docks a few points from your score, and if many are made within a short amount of time, it makes you look risky, which can further influence your credit score in a negative way.

So then closing a bunch of accounts must be the way to go, right? Not quite. Depending on the accounts you close, you could unintentionally be raising your credit utilization ratio and shortening the overall length of your credit history. Both of these consequences lower your credit score.

The best approach is to space out any credit account openings or closings. Try to time them in a way that any short-term negative impact on your credit score won’t interfere with an important upcoming car loan or mortgage. Do your research, only apply for credit products you need, and understand what a specific credit card is contributing to your score before making the decision to close it (that first college credit card may have a low limit and no rewards, but if it’s adding a few years on to your credit history, it’s best to keep it in rotation).

Credit Score Myths Debunked: 3 Mistakes That Can Hurt Your Score (and What to Do Instead) — Lutheran FCU

Lutheran FCU — Fri, 13 Feb 2026 15:30:00 GMT

Clearing up common credit misconceptions.

There are several ways to boost your credit score, and the more techniques you know, the better off you are. However, there is a lot of misinformation out there about credit, too. Here are some credit score myths.

Myth: Paying Bills Doesn’t Matter

Wrong. The biggest, easiest way to improve your credit score is also the most boring: Pay your bills on time, every time.

Payment History. Payment history is the most important factor in your credit score. If you are late on payments, your score will suffer. Paying bills matters. A lot.

Myth: As Long as You Pay Some Debt, You’re Fine

Nope. Making minimum payments isn’t going to help you much. You want to have as little debt as possible.

Credit Utilization. That means you need a low credit utilization ratio. This ratio is your total available credit divided by the amount of debt you’re using. You want your utilization to be below 30 percent; even lower if possible.
Boosting Utilization. The best way to lower your utilization is to pay off your credit cards in full each month. If you need additional help with credit card debt, you could try a balance transfer card. These cards allow you to pay off your debt without incurring interest charges.

Myth: Close Your Old Cards

False. The truth is exactly the opposite: keep old credit cards open, even if you don’t use them anymore.

Strong Credit History. Keeping old paid-off cards open is good for your credit history. It shows lenders you have a long history of good payment history.
Fee Cards. If the card has an annual fee, contact the lender and see about switching to a different version of the card without the fee, so you can maintain a long credit history without additional fees.

Do One Thing: Pay bills on time each month, as this is the quickest, easiest way to improve your credit score.

Guest Author: Chris O’Shea

Credit Score Breakdown — Lutheran FCU

Lutheran FCU — Thu, 05 Feb 2026 17:00:00 GMT

You’ve likely heard about credit scores before (thanks to all those commercials with terrible jingles), but what do you actually know about them? How long have they been around? And what’s the deal with checking them?

A credit score is a number (usually between 300 and 850) that represents your creditworthiness. It’s a standardized measurement that financial institutions and credit card companies use to determine risk level when considering issuing you a loan or a credit card. Basically, it provides a snapshot of how likely you are to repay your debts on time. Widespread use of credit scores has made credit more widely available and less expensive for many consumers.

The credit scoring system that we’re familiar with today has been around since the 1980s. Before then, there was no standardized way to measure creditworthiness, so it was up to individual lenders to make judgment calls on whether or not to loan money to someone. The old system was time-consuming, inconsistent and quite biased, so a credit scoring system was introduced.

The FICO® Score is the best known and most widely used credit score model in North America. It was first introduced in 1989 by FICO, then called Fair, Isaac and Company. The FICO Score model is used by the vast majority of banks and credit grantors, and is based on consumer credit files from the three national credit bureaus: Experian, Equifax and TransUnion. Because a consumer's credit file may contain different information at each of the bureaus, FICO scores can vary, depending on which bureau provides the information to FICO to generate the score.

When credit scores were first introduced, they were used primarily for loaning money. Today, credit scores have much more pull, and that’s why it’s important to understand how they’re calculated. Your monthly car payments, your ability to snag that sweet apartment and even the hiring manager’s decision on that new job you applied for can all be influenced by your credit score.

A very good (740-800) or exceptional (800+) credit score means you’re in good shape. Scores under 580 are considered poor and mean you could be turned down for a loan. Scores in the fair-to-good range (580 to 670) might get you loan approval, but your interest rates will be higher than if you had an exceptional credit score. Nobody likes the idea of paying more money for no reason, so it makes sense to adopt credit habits that will boost your overall score.

Taking the time to familiarize yourself with how credit scores are calculated is the first step in getting a strong score. Each credit bureau uses a slightly different calculation, but the basic breakdown goes like this:

35% is based on payment history. Making payments on time boosts your score.
30% is based on capacity. This is one of the areas where the less you use of your total available credit, the better. If you get close to maxing out all your credit cards or lines of credit, it tanks your score, even if you’re making your payments on time.
15% is based on length of credit. Good credit habits over a long period of time raise your score.
10% is based on new credit. Opening new credit cards (this includes retail credit cards) has a short-term negative effect on your score, so don’t open a whole bunch at once!
10% is based on mix of credit. Having a combination of different types of credit (like revolving credit and installment loans) boosts this part of your score. Credit cards are considered revolving credit, and things like car loans and mortgages are installment loans.

Curious about your credit report? You are entitled to free weekly credit reports from each of the major credit bureaus. Set seasonal calendar reminders so you can remember to check on your credit report throughout the year. Request yours online by visiting annualcreditreport.com.

When you receive your credit report, you’ll notice that it does not list your three-digit credit score. Despite this, it’s still a helpful reference because it serves as the basis of your credit score. If you know how a credit score is calculated, then you know how to look for factors on your credit report that might be influencing your score for better or for worse. It’s also an easy way to look at account openings, account closings and what your repayment history looks like.

If you’re a member of Lutheran Federal Credit Union, you have access to your credit score and credit report through our free credit score and more tool available in our online banking platform.

To get access to your actual credit score, there’s often an extra fee involved (usually between $15 and $25). An alternative is to visit creditkarma.com. This service provides an estimate of your credit score for free. Just be aware that this score uses a different calculation than FICO does, so while it comes pretty close, it still won’t be exact.

Some commercials make it seem like credit scores are big, mysterious, randomly assigned numbers. But with a little research, a little patience and some good habits, you can influence your credit score in a positive way and not be caught off guard by a denied loan or an outrageous interest rate.

How to Set Financial Goals You’ll Actually Keep in the New Year — Lutheran FCU

Lutheran FCU — Fri, 30 Jan 2026 18:30:00 GMT

Forget resolutions. Instead, look to SMART goals that you can accomplish in the coming year.

Do one thing: It is time to flip the script on making resolutions, and instead break down what you want to achieve in the new year into more manageable, bite-sized goals.

Goodbye Resolutions, Hello Goals

We almost always have the best intentions when we turn the page on a shiny new year and begin making plans for the things we hope to accomplish in the days and months ahead. In fact, millions of Americans – roughly one-third of us living in the U.S. – make annual resolutions, according to the Pew Research Center. Of those hopeful people, nearly two-thirds (some 61%) want something financial.

Start Small to Build Momentum

“The problem with most financial resolutions is they are way too big and too vague,” says Certified Financial Planner Alvin Carlos, managing partner at District Capital Management in Washington, DC. “Start small. Be specific.”

Reframe Goals. To be more specific with your goals, he recommends reframing like this:

Don’t just say ‘I want to save more.’
Make a plan on how you will sock away more by saying, “I will move $200 to my high-yield savings every time I get paid.”

Make SMART Goals

You probably won’t be surprised to find out that research shows us time and again that most people give up on their resolutions within just a few months, if that long. That’s why it’s so much better (and more productive) to ditch the resolutions we make for ourselves in favor of goals. And those goals are even better when they are SMART, which stands for:

Specific
Measurable
Achievable
Relevant
Time Bound

Essentially, this means that when you set a new goal using the SMART formula:

You need to know exactly what you are aiming for.
You need to know when you want to achieve the goal.
Next, get strategic and break it down into smaller chunks that you can more easily manage – instead of aiming for the whole thing at once.

Why? Because if you try to do too much too quickly, the odds are in your favor to fail and not accomplish what you set out for.

Real Life Example of a SMART Goal

If you could really use a vacation – or beef up your emergency fund – by the end of 2026, here’s how to turn it into a SMART goal.

SMART Goal Steps

To get started, here are some real-life steps:

Take a few minutes and break it down on paper, a computer file, or a spreadsheet.
To be more specific, measurable, and time-bound, you can commit to saving $5,200 (or any amount you choose) for an emergency fund or vacation by the end of December 2026.
To make it achievable, it’s helpful to break it down into smaller chunks as mentioned previously.
To do that, note that you will need to:
- Save $100 a week for the 52 weeks to achieve your goal.
- Break it down even more by day, save about $14.29 a day to reach your year-end goal.

Pro-tip: One of the best ways to save money is to set up a separate account and funnel funds from your main checking account to the other account every time you get paid. Most financial institutions allow you to set up automatic transfers from one account to another to streamline the process.

Accountability

Just like with other goals – to eat at home more often or exercise more regularly, for example – it really helps you achieve your objectives when you let someone else know, so you have a friend or spouse to help keep you on track when things get challenging. Carlos says:

Share your goal with someone and share your monthly progress.
Most of us will need an accountability partner.
If you reach a milestone, you’ll have someone to celebrate it with.

Science of Accountability

Science backs this up. Several controlled psychological studies and other behavioral research across several domains (including goal setting, exercise, and habit change) show that adding social accountability can significantly improve your goal attainment compared to people who privately track their progress without letting anyone else know.

Get It on Paper

And just like you have better recall of things you write down, think about a student taking notes for a test. Research from Dominican University in California shows that:

People who take the time to actually write down a goal have a significantly greater chance of reaching the objective than those who simply think about it.

The Power of Writing it Down

Dominican Psychology Professor Gail Matthews conducted a study with 149 people from the U.S. and abroad of varying ages and careers. The participants pursued a number of goals, including: completing a project, increasing income, increasing productivity, getting organized, reducing work anxiety, and learning a new skill.

After placing participants in different groups where they considered a goal, wrote down a goal, and shared the goal with someone, among other experiences, the results showed the following:

Those who took pen to paper and then shared their goal with a friend or colleague met their goal within a specific timeframe.
The research also showed that even the group that wrote down a goal and did not share it with others had better success than those who never wrote the goal down at all.

Guest author: Jean Chatzky with reporting by Casandra Andrews