Post on 23-Dec-2015
© 2006 Consumer Jungle
Credit Scores & Reports
© 2006 Consumer Jungle
Learning Target
• I can explain what can affect my credit score and how to improve it.
© 2006 Consumer Jungle
Why Credit is Important
• FICO or credit score:• Credit Card Issuers &
Lenders– Determine APR
• Auto Insurers– Determine Premium
• Employers– Are you a worthy hire?
• Landlords– Are you a reliable tenant?
© 2006 Consumer Jungle
Credit / FICO Score
• Fair Isaac Company
• Range between 300 & 850
• U.S. Median: 723• < 620 = sub prime• > 760 = best rates
© 2006 Consumer Jungle
The Cost of Borrowing
Your Credit score:
Your interest rate:
Your monthly payment:
760 - 850 6.13% $1,313
700 - 759 6.35% $1,344
680 - 699 6.53% $1,369
660 - 679 6.74% $1,400
640 - 659 7.17% $1,462
620 - 639 7.72% $1,543
© 2006 Consumer Jungle
© 2006 Consumer Jungle
35% Payment History
• Late payments have the greatest negative impact.
• Recency & frequency are important too.
© 2006 Consumer Jungle
30% Outstanding Balances
• Total balance vs. total available credit.
• Are you overextended?
© 2006 Consumer Jungle
15% Length of Credit History
• Number of years you’ve used credit.
• How long since you’ve used certain accounts.
© 2006 Consumer Jungle
10% New Credit
• Number of new accounts.
• Multiple requests reduce your score.
© 2006 Consumer Jungle
10% Types of Credit
• Mix of:–Revolving Credit
• Credit cards– Installment
Credit• Car loan• Home loan
© 2006 Consumer Jungle
How to Improve Your Score
• Pay all bills on time.
• Pay any delinquent bills.
• Lower your total credit card debt.
© 2006 Consumer Jungle
How to Improve Your Score
• Don’t close unused credit cards.
• Don’t open up new credit cards to increase available credit.
© 2006 Consumer Jungle
How to Get Your Score
• Three Credit Scores– 1) TransUnion– 2) Experian– 3) Equifax
• $15.95 each
• $47.85 (all three & includes report)
• www.myfico.com or • 1-800-342-6726
© 2006 Consumer Jungle
How to Get Your Credit Report
• www.annualcreditreport.com
• 1-877-322-8228• 1 Free Report each year by each credit bureau:
– TransUnion– Experian– Equifax
• Order once from all three companies (or)• Order every 4 months from a different company
© 2006 Consumer Jungle
Your Credit Report
© 2006 Consumer Jungle
Selecting the Right Card
What if credit cards had a warning label on them?
What would they say??
Create a Warning Label
Include the following warnings:• May cause….• Use only for….• Do not use for….• Avoid….
Include A Picture!!!
In a consumer society there are inevitably two kinds of slaves: the prisoners of addiction
and the prisoners of envy.
-Ivan Illich (1926-2002)