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Understanding Your CREDIT REPORT AND SCORE

Understanding Your CREDIT REPORT AND SCORE. PRESENTED BY GREEN PATH. Sally Counselor Certified Consumer Credit Counselor. TODAY’S. AGENDA. Why is credit i mportant? What’s in a credit report? How can you get your credit report? How is your credit score calculated?

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Understanding Your CREDIT REPORT AND SCORE

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  1. Understanding Your CREDIT REPORT AND SCORE PRESENTED BY GREENPATH Sally Counselor Certified Consumer Credit Counselor

  2. TODAY’S AGENDA Why is credit important? What’s in a credit report? How can you get your credit report? How is your credit score calculated? How can you build/rebuild your credit? Common credit score myths Credit Reports and Scores

  3. WHY IS CREDIT IMPORTANT? If you have damaged credit, what areas of your life are affected? What do you think?

  4. Good credit = getting your dream job (60% of employers do credit checks.)

  5. Good credit = getting a loan when you need it

  6. Good credit = renting or buying your own place

  7. Good credit = not getting ripped off when you get a loan Look familiar?

  8. $250,000 30-Year Fixed Rate Mortgage Good credit saved Angela $34,258

  9. What Advice Would You Give to Diego? His credit score cost Diego $34,258

  10. WhatisListedon Your Credit Report? Identifying Information Money You Borrow Collection Records Public Records Inquiries Consumer Statement

  11. Credit Reports: OneSlice of Your Financial Pie Income and assets are not listed. You could have excellent credit, but have no savings or income. You could have poor credit, but be very wealthy.

  12. Credit Bureaus Three Major Credit Bureaus: Each bureau has different types of info so review all three reports for a complete picture

  13. What is the best website to get your free credit report?

  14. NOT FREE!

  15. www.annualcreditreport.com

  16. Get a free estimate of your score (from Transunion) www.creditkarma.com

  17. Negative Information • Delinquencies, collections, public records and most other negative items: seven years • Chapter 7 bankruptcy reported for ten years • Unpaid tax liens reported for 15 years • Positive info: 10 years

  18. How to Fix Errors To request an investigation of an error: • Send copies, keep records, document your claim • File dispute online if report was obtained online • If unhappy with outcome, file complaint with Consumer Financial Protection Bureau (CFPB) by going to www.consumerfinance.gov or calling 855-411-2372.

  19. Credit Scoring • Credit score is a number based on the credit report used to predict how likely you are to pay a new debt back • Last two years of activity have the greatest impact

  20. Your Credit Score • FICO Score • Developed by Fair-Isaacs Corp • Most commonly used by lenders • Range is 300-850 • 300s, 400s, 500s = poor • 600s = fair • 700s and above = good or excellent

  21. Who has the better credit score?

  22. Credit Score How is FICO calculated? • Payment History: 35% • Credit utilization: 30% • Length of Credit History: 15% • New Credit: 10% • Types of Credit Used: 10% • See www.myfico.com for more information

  23. I have no credit. What is the best way to build my credit?

  24. Building Your Credit Secured credit cards: make a deposit and receive a card with a limit equal to the deposit amount. Prepaid cards don’t build credit!

  25. Using Secured Cards Wisely 1. Have money in savings as a backup. 2. Consider only making one charge a month and make this charge an automatic bill, such as internet or cell phone. 3. Use less than 1/3 of your available credit. 4. Pay off the entire balance at the end of the month to avoid finance charges.

  26. Building or Repairing Credit • Secured loans • Store (Retail) Credit • Gas card • Obtaining a co-signer/being added as an authorized user Credit Repairs Ahead

  27. MYTH #1 Closing a credit card will always hurt my credit score.

  28. Andrew • 3 maxed out credit cards. • Paid off the first card and decides to close it (so he’s not tempted to use it again) • Other two cards remain maxed out.

  29. Diego • Five open accounts. • All balances are either zero or near zero • Decides to close one of his accounts (to avoid an annual fee)

  30. MYTH #2 My credit score is 760, so I have excellent credit.

  31. Other Credit Scores Vantage Scores range from 501 – 990 using Alpha Indicators 501-600 F 601-700 D 701-800 C 801-900 B 901-990 A

  32. MYTH #3 Checking my credit report will hurt my credit score.

  33. GET IN TOUCH CONTACT US We’dloveto chat more! GreenPath is a not for profit consumer credit counseling agency and HUD approved housing counseling agency with offices around the country. facebook.com/greenpathdebt f twitter.com/greenpathdebt t

  34. THANK YOU Sally Counselor Certified Consumer Credit Counselor scounselor@greenpath.com www.greenpath.org/university

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