Post on 16-Apr-2017
Money Wise CreditFrom debt to wealth
Benefits of good credit• Convenience and
emergency protection for unexpected disasters
• Allows budget flexibility• Can help lower your
overall cost of living by making you eligible for best rates on insurance, interest, etc.
Why you may be denied credit• Lack of Credit References• Insufficient Income• Too short a period of
residency or employment• Derogatory Credit history• Too many Inquiries• Overextended with Credit• NSF Checks
Types of credit• Secured = Credit backed up by savings or
deposit equal to the amount of debt• Unsecured = Most credit, gas, and retail
cards• Installment = Fixed amount, fixed term,
fixed simple interest• Revolving = Variable amount,
undetermined term, variable monthly payment
How to obtain credit reports & scores
www.annualcreditreport.com1-877-322-8228
Annual Credit Report Request ServicePO Box 105283Atlanta, GA 30348-5283
1-888-397-3742www.experian.com
Experian475 Anton Blvd.Costa Mesa, CA 92626
1-800-888-4213www.transunion.com
TransunionPO Box 2000Chester, PA 19022
1-800-685-1111www.equifax.com
EquifaxPO Box 740123Atlanta, GA 30374-0123
What is credit scoring?
• A numerical score between 300-850
• Determines if credit is granted, the amount offered, and interest rate
• Bill payment history, number and types of accounts, late payments, collection actions, outstanding debt and age of accounts are all factors in assigning a credit score
Determining credit scores
An individual’s data is compared to consumers with a similar profile and a score is assigned based on factors that predict who is most likely to repay a debt
Credit scoring at a glance
Payment History 35%
Amounts Owed 30%
Length of Credit Record 15%
Types of Credit 10%
Inquiries 10%
Credit score guidelines
Each time a consumer’s credit information is accessed an “Inquiry” is added onto the credit report
The inquiry shows who accessed the credit report and the date of that action
Inquiries stay in a credit file for 2 years
Credit score guidelines (cont’d)
• Negative account information will be reported for 7 years
• Chapter 13 Bankruptcy filing stays 7 years from date of filing
• Chapter 7 Bankruptcy stays on credit record for 10 years
• Defaulted student loans, judgments on loans, and lawsuits can be listed longer
Credit Card Debt Statistics
• Payment patterns• Average debt per
household• Average interest rate
per household• Hidden costs and fees
Building Personal Wealth
Build wealth by paying yourself first.Your best financial investment is the one you make in yourself, because only you have your best interests at stake!
Breaking the Cycle of Debt
• Put yourself in control• Find out where you are today• Establish or update your Spending Plan• Track your successes• Reward yourself along the way
Stop Paying for Time!
• Minimum payments = maximum debt
• Paying off debt vs. managing interest
• How to save $23,425.78 in interest charges
From Average Joe to Joe Millionaire
• Pay down debt and save money to build wealth
• Set short-, medium-, and long-range financial goals
• Be focused and consistent• Remember: good credit and
smart money management habits benefit you
Money Wise Strategies
DO plan and set financial goals
DO pay yourself firstDO pay bills on time,
every monthDO reconcile your bank
and credit card statements monthly
X DON’T make just the minimum payment on your credit cards
X DON’T live above your means
X DON’T abuse creditX DON’T forget that credit
card terms and costs benefit the card issuer