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Understanding Credit and Debt

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Information about Understanding Credit and Debt
Finance

Published on January 26, 2009

Author: badcreditchannel

Source: slideshare.net

Description

Topics Covered: Debt & How To Handle It,
Your Credit Score & How To Raise It, Credit Reports & How To Obtain One, Credit In The Current Tight Market, & Talking To Kids About Credit.
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Understanding Credit & Debt Bad Credit Channel

Benjamin Franklin’s Thoughts On Debt “ Creditors have better memories than debtors.”

“ Creditors have better memories than debtors.”

Topics Debt & How To Handle It Your Credit Score & How To Raise It Credit Reports & How To Obtain One Credit In The Current Tight Market Talking To Kids About Credit

Debt & How To Handle It

Your Credit Score & How To Raise It

Credit Reports & How To Obtain One

Credit In The Current Tight Market

Talking To Kids About Credit

Not All Debt Is Evil Credit is a valuable tool, yet many people misuse and overuse it.

Credit is a valuable tool, yet many people misuse and overuse it.

Excessive Debt Six Warning Signs Signs of someone who may be in trouble: Making only the minimum payment Maxing or nearly maxing out credit cards Not knowing how much is owed

Signs of someone who may be in trouble:

Making only the minimum payment

Maxing or nearly maxing out credit cards

Not knowing how much is owed

Debt Warning Signs, cont. Signs of someone who may be in trouble: Using credit cards to purchase items that used to be purchased with cash Paying off one card with another card Phone calls or letters from creditors

Signs of someone who may be in trouble:

Using credit cards to purchase items that used to be purchased with cash

Paying off one card with another card

Phone calls or letters from creditors

Lowering Your Debt Ask Your Credit Card Company To Lower Your Interest Rate If Your Card Company Wont Lower – Shop For A Lower Rate Card Set up a tight budget and stick to it. Find ways to save money – America Saves Set realistic goals

Ask Your Credit Card Company To Lower Your Interest Rate

If Your Card Company Wont Lower – Shop For A Lower Rate Card

Set up a tight budget and stick to it. Find ways to save money – America Saves

Set realistic goals

If You Are In Trouble Stop Borrowing Contact Your Creditors Know your rights. Review the Fair Debt Collection Act Speak with a credit counselor

Stop Borrowing

Contact Your Creditors

Know your rights. Review the Fair Debt Collection Act

Speak with a credit counselor

Where To Turn For Help Credit Counselors National Foundation for Credit Counseling www.debtadvice.org Debt Management Plans Friends or Family Ask to borrow money from a friend or family.

Credit Counselors

National Foundation for Credit Counseling www.debtadvice.org

Debt Management Plans

Friends or Family

Ask to borrow money from a friend or family.

Protect Yourself Be wary of organizations or individuals that: Promise to solve your problem overnight Charge high up front fees Won’t disclose the costs for their services

Be wary of organizations or individuals that:

Promise to solve your problem overnight

Charge high up front fees

Won’t disclose the costs for their services

Credit Reports & Credit Scores

Common Knowledge Only 49% of Americans have obtained their credit score in the past two years. Have you?

Only 49% of Americans have obtained their credit score in the past two years. Have you?

Credit Scores What Is A Credit Score? The score given to an individual to determine their credit worthiness. FICO and Vantage. Who checks your credit score? Credit card companies Lenders (Auto Loans, Home Loans, Personal Loans) Insurance Companies Employers Phone companies

What Is A Credit Score?

The score given to an individual to determine their credit worthiness. FICO and Vantage.

Who checks your credit score?

Credit card companies

Lenders (Auto Loans, Home Loans, Personal Loans)

Insurance Companies

Employers

Phone companies

Credit Scores How your score can affect you: Interest Rates If your rate goes up on 1 card it can go up on another Insurance Rates Some Employers Use It When Hiring

How your score can affect you:

Interest Rates

If your rate goes up on 1 card it can go up on another

Insurance Rates

Some Employers Use It When Hiring

An Example On a $225,000 home: 6% Interest Rate 30-year fixed = $1348/mo 5% Interest Rate 30-year fixed = $1207/mo. $141.14/mo. difference $50,810 over 30 yrs

On a $225,000 home:

6% Interest Rate

30-year fixed = $1348/mo

5% Interest Rate

30-year fixed = $1207/mo.

$141.14/mo. difference

$50,810 over 30 yrs

How Your Score Is Calculated FICO® scores are calculated based on your rating in five general categories : 1) Payment History 2) Amounts Owed 3) Length Of Credit History 4) New Credit 5) Types Of Credit Used

FICO® scores are calculated based on your rating in five general categories :

1) Payment History 2) Amounts Owed 3) Length Of Credit History

4) New Credit 5) Types Of Credit Used

What’s A Good Score? FICO Scores Range From 300 – 850 In the eyes of most lenders, FICO credit scores above 700 (750) are very good . Recent changes in the economy have changed what lenders as a very good score

FICO Scores Range From 300 – 850

In the eyes of most lenders, FICO credit scores above 700 (750) are very good .

Recent changes in the economy have changed what lenders as a very good score

Your Credit Report A credit report is a report containing a detailed credit history of an individual. What’s On Your Credit Report? Personal Information (Name, SSN, Etc.) Public Records & Collection Accounts (Bankruptcies, Foreclosures, Etc.) Your Credit History & Current Obligations Credit Inquiries

A credit report is a report containing a detailed credit history of an individual.

What’s On Your Credit Report?

Personal Information (Name, SSN, Etc.)

Public Records & Collection Accounts (Bankruptcies, Foreclosures, Etc.)

Your Credit History & Current Obligations

Credit Inquiries

How To Check Your Credit Report & Score You are entitled to 1 free credit report a year from each of the 3 major credit bureaus . To request your free credit report visit www.annualcreditreport.com You can also request your credit score. A small fee may apply.

You are entitled to 1 free credit report a year from each of the 3 major credit bureaus .

To request your free credit report visit www.annualcreditreport.com

You can also request your credit score. A small fee may apply.

Improving Credit Scores Pay Bills On Time. Get current & stay current. Pay Off Debt – Don’t Move It Around or Ignore it. Don’t Close Unused Credit Cards As A Short-Term Strategy To Raise Your Score Don’t Open New Credit You Don’t Need.

Pay Bills On Time. Get current & stay current.

Pay Off Debt – Don’t Move It Around or Ignore it.

Don’t Close Unused Credit Cards As A Short-Term Strategy To Raise Your Score

Don’t Open New Credit You Don’t Need.

More Tips For Improving Credit Scores Repair Errors (Outstanding Debts You Paid) Pay Down Balances To 20-30% Of Credit If You Have 1 Or 2 Old Cards You Haven't Used Put A Little On The Card And Then Pay It Off Do This About 1 Every 6 Months

Repair Errors (Outstanding Debts You Paid)

Pay Down Balances To 20-30% Of Credit

If You Have 1 Or 2 Old Cards You Haven't Used Put A Little On The Card And Then Pay It Off

Do This About 1 Every 6 Months

Credit In Today’s Tight Market Lenders are lowering credit limits 20% banks lower on prime borrowers 60% banks lower on subprime borrowers Lenders are tightening their requirements. Good Score - 750 or higher Lenders are closing inactive cards Less liability

Lenders are lowering credit limits

20% banks lower on prime borrowers

60% banks lower on subprime borrowers

Lenders are tightening their requirements.

Good Score - 750 or higher

Lenders are closing inactive cards

Less liability

Talking to Kids about Credit

Key Talking Points Communicate the following key ideas with your students/children They should charge only what they can afford to pay back. Credit cards shouldn't be a money substitute for items they can't afford. They need to pay their bills on time and not just the minimum amount. Credit companies specifically target college students.

Communicate the following key ideas with your students/children

They should charge only what they can afford to pay back.

Credit cards shouldn't be a money substitute for items they can't afford.

They need to pay their bills on time and not just the minimum amount.

Credit companies specifically target college students.

Resources for Students DFI’s Right on the Money – Financial Know-How For College Students www.dfi.wa.gov/consumers/collegebookorder.htm FTC Credit Web Site www.ftc.gov/credit AICPA www.360financialliteracy.org/Life+Stages/College/ Bad Credit Hotel www.controlyourcredit.gov/

DFI’s Right on the Money – Financial Know-How For College Students

www.dfi.wa.gov/consumers/collegebookorder.htm

FTC Credit Web Site

www.ftc.gov/credit

AICPA

www.360financialliteracy.org/Life+Stages/College/

Bad Credit Hotel

www.controlyourcredit.gov/

For More Credit Info… This presentation is brought to you by >> BadCreditChannel.com The Go-To Information Source for Individuals Living with Bad Credit

This presentation is brought to you by

>> BadCreditChannel.com

The Go-To Information Source for Individuals Living with Bad Credit

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