Please…

• Please place your notes from yesterday in the basket

• Log into Moodle and complete today’s Bell Ringer

Credit Abuse Resistance Education Program 2

FICO Credit Scores

1. A score determined by your past use of credit, as recorded by the three credit-reporting agencies

2. A 3-digit number between 300 & 850

You have three FICO scores, one from each credit-reporting agency.

Equifax – TransUnion – Experian

You have three FICO scores, one from each credit-reporting agency.

Equifax – TransUnion – Experian

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FICO Credit Scores (continued)

3. Used by lenders to determine your interest rate

4. Lower FICO score = higher interest

5. Scores >800 = getting the best interest

Average interest rate for a $300,000 30-year, fixed-rate mortgage on February 8, 2011, based on average nationwide credit scores.

Source: http://www.myfico.com/LoanCenter/Mortgage/ 02/08/2011

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FICO Credit Scores (continued)

The cost difference between the highest

and lowest credit scores for a $300,000

loan:

Average interest rate for a $300,000 30-year, fixed-rate mortgage on February 8, 2011, based on average nationwide credit scores.

Source: http://www.myfico.com/LoanCenter/Mortgage/ 02/08/2011

• $299 per month• $3,588 per year• $107,640 for the

entire 30-year loan

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FICO Credit Scores (continued)

6. Also used by lenders to decide:– Whether to approve your credit application– Whether to increase your credit limit– How to treat you if you make a late payment

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FICO Credit Scores (continued)

3. Used by landlords to see if you are financially responsible

4. Used by employers to determine good candidates5. Used by cell phone carriers to determine whether

they should give you a contract6. Used by insurance companies to give you discounts7. It could show up in many more venues!

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Please…

Open up a blank Word document and finish this list by finding information online:

I can get a good FICO score by doing these things:1. 2. 3. 4. 5.

High FICO Score

How is this score determined?

• Payment history: 35% of your credit score is based on how you handle your payments.

• Amount of credit used: Another 30% of your credit score has to do with how much of your available credit is being used.

• Age of credit: Next, the age of your credit accounts for 15% of your credit score.

How is this score determined?

• Types of accounts: All of the accounts you have opened are included in your credit report (10% of your score).

• New credit and inquiries: The final 10% of your credit score is based on the credit inquiries made on your behalf.– Your score can be lowered if you apply for too

many credit accounts at once.

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Tips: Establishing Credit

1. Establish good credit by paying bills in full and on time each month.– All your bills!

2. Take out a small loan and repay it in a timely manner to establish a good credit record – Use a parent as co-signer

3. If you have a credit card, charge a small amount each month and pay it off in full

4. Don’t open too many credit cards – use 1 or 2 wisely5. Check your credit score at least once a year

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Tips: Determine if Credit is for You

Before you make a purchase using credit, determine:

– How much the purchase will really cost you• Use credit card calculators online:

http://www.bankrate.com

– Whether you can actually afford the purchase– If it is better to wait and pay in cash

Advertisement Project• With a partner you will create a poster as part of

the “Wise Credit Campaign”– Use Word, Publisher, Photoshop, etc

• Must include:1. A slogan that you come up with that encompasses

what we went over the last 2 days2. The positives and negatives of credit3. Advice on how to use credit wisely4. Things to be careful of when using credit 5. What a credit score is and how to get a good one