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Understanding Your Credit . Presented by Stephen McQueen, CPA, of the Financial Literacy Committee of the Colorado Society of CPAs. Understanding Credit - Outline. Homework Review Importance of Credit Report Sample Credit Report - Review Fixing Incorrect Info on Credit Report
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Understanding Your Credit Presented by Stephen McQueen, CPA, of the Financial Literacy Committee of the Colorado Society of CPAs
Understanding Credit - Outline • Homework Review • Importance of Credit Report • Sample Credit Report - Review • Fixing Incorrect Info on Credit Report • How is a Credit Score Developed • FICO Score Ranges • Improving Your Credit Score • Go Forward with Credit Reports
“One of my most prized assets is my good credit rating”…Unknown - Homework Review - • How many were able to run their report? • Any hangups, issues? • Any surprises, or inaccurate information?
“Remember that credit is money”…Benjamin Franklin - Importance of Credit Report - • Who is using a credit report to evaluate us? • When we don’t have cash to buy something • Cost of bad credit
“No Man’s Credit is Ever as Good as His Money”…Edgar Watson Howe • Sample Credit Report – • See Attached
“The Creditor Hath a Better Memory than the Debtor”…James Howell • Fixing Incorrect Info on Credit Report – • Contact both bureau and credit grantor • Dispute in writing • Identify dispute, include copies of documents • Send by certified mail, return receipt • Process could take up to 90 days
“Friendship, Like Credit, is Highest When it is not Used”…Elbert Hubbard - How is a FICO Score Developed – • (35%) Payment History • (30%) Amounts Owed • (15%) Length of Credit History • (10%) New Credit • (10%) Type of Credit Used • What information in not included in FICO score?
“The Surest Way to Establish Your Credit is to Work Yourself into the Position of Not Needing Any”…Maurice Switzer • FICO (Fair Isaac Corporation) Score Ranges • (300 – 499) Very Poor 2% • (500 – 599) Poor 13% • (600 – 670) Good 12% • (671 – 759) Very Good 33% • (760 – 850) Great 40% • 723 is the Median FICO score
“Repairing Bad Credit is a Bit Like Losing Weight, it Takes Time and There is No Quick Fix”…MyFicoScore.com • Improving Your Credit Score – • Run your credit report, annually/consistently • Set up payment reminders, and/or auto-pay • Rate shop loans within focused period of time • Don’t open several new credit cards • Pay bills on time • Review statements regularly and carefully • Keep list of card/bank account numbers • Open different types of credit
“Many a Man Thinks he is Buying Pleasure, When he is Really Selling Himself to it”…Ben Franklin • Credit Repair Companies – • Promises to repair credit and wipe out debt • Choosing a credit counselor • Can be a difficult process • How do you determine if a counselor is reputable? • Questions to ask • http://www.ftc.gov/bcp/edu/microsites/moneymatters/index.html
“A Penny Earned is a Penny Saved”…Benjamin Franklin • Go Forward with Credit Reports – • Should run report 1/year, it is free • www.annualcreditreport.com • Run all 3 together, or one every 4 months • Equifax, Experian & TransUnion • FICO score, credit monitoring • Keep report safe