“A person’s credit report is one of the most important tools consumers can use to maintain their financial security and credit rating, but for so long many did not know how to obtain one, or what to do with the information it provided.”<br /> -Ruben Hinojosa<br />Making money sensetips and ideas to help your family prosper<br />Understanding Credit<br />
What is Credit?<br />Money you borrow and plan to repay.<br />In most cases, there is a charge for borrowing the money (fees or interest).<br />Questions to ask before you use credit for a purchase<br />Why am I buying?<br />Is it a need or a want?<br />How am I going to pay for it?<br />Rate affordability, how much is it really going to cost?<br />Monthly payments, will it fit into my budget?<br />Could I pay in cash or with other resources?<br />How long is it going to take to pay back?<br />What is the plan to pay the credit card bill?<br />1<br />Source: www.practicalmoneyskills.com<br />
Advantages and Disadvantages of credit<br />2<br />
Most Common Types of Credit<br />Revolving: allows you to borrow money at any time up to a set limit. (Credit Card & Home Equity Line of Credit)<br />Installment: allows you to borrow a specific amount of money at one time for a defined purpose. (Car, Boat, Motorcycle, Student, or Personal loan)<br />Non-Installment or service: allows you to pay for a used service at a later date. (Furniture stores, Utility companies, & Doctor bills)<br />3<br />
Your Responsibilities and Rights<br />What is your responsibility when it comes to using credit?<br />Pay it back<br />Not to run up more debt than what you can comfortably pay back<br />Understand your credit card terms<br />Your Rights:<br />Truth in Lending Act<br />Fair Credit Reporting Act<br />Equal Opportunity Act<br />Fair Credit Billing Act<br />Fair Debt Collection Practices Act<br />4<br />
How Much Can You Afford<br />20-10 Rule<br />7<br />
Credit Scores Often Misunderstood<br />66.5% of Americans don’t know or responded incorrectly when asked to define a good credit score, which is correctly defined as a score of 700 or higher.<br />54% incorrectly believed that age is a factor in determining credit scores.<br />52% do not regularly review their credit report.<br />23% have never done so. <br />8<br />Source: www.thriventffc.com<br />
Understanding Your Credit Report <br />What is a Credit Report<br />A document containing detailed information on a person’s credit history, including identifying information, credit accounts and loans, bankruptcies and late payments, and recent inquiries. It can be obtained by prospective lenders with the borrower’s permission, to determine his or her credit worthiness. <br />Credit Reports include four types of information:<br />Identifying Information<br />Social Security Number<br />Date of Birth<br />Phone Number<br />Current and Previous Addresses <br />Credit Information<br />Who they owe<br />What they owe, installment, revolving payments<br />Public Record Information<br />Judgments<br />Bankruptcies (10 years)<br />Medical Collections<br />Libraries <br />Inquires<br />Promotional or uninvited inquires<br />Pre-Approval from company promotions <br />Credit Inquires<br />9<br />Source: http://www.investorwords.com/5490/credit_report.html<br />
How Can I Get My Credit Report/Score<br />11<br />www.annualcreditreport.com (One free per year)<br />Three Credit Bureaus:<br />Equifax (www.equifax.com)<br />P.O. Box 105873<br />Atlanta, GA 30348 <br />Trans Union Corporation (www.transunion.com)<br />P.O. Box 390, Springfield, PA 19064-03901<br />Experian (www.experian.com) <br />P.O. Box 2350, Chatsworth, CA 91313-2350<br />
Why Your Credit Score Might Be Low & How To Improve It<br />12<br />
Steps to Correct Credit Report Errors<br />Get a copy of your credit report!<br />Go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm<br />for a sample dispute letter.<br />13<br />
Points To Consider When Shopping For A Credit Card<br />Interest Rate – locked, variable, introductory <br />Annual Fees<br />Grace Period<br />Late Fees<br />Percent of payment you owe – minimum payment<br />How do you plan to use card<br />Rewards<br />Service <br />Payments locally or online<br />Where is it accepted<br />Foreign transaction rate<br />Cash advance features<br />Balance transfers<br />Credit limit <br />15<br />
Reducing Credit Card Debt-<br />Power Pay<br />“How can I get rid of my credit card debt?”<br /><ul><li>Stop making new charges.
Helpful Websites<br /><ul><li>www.optoutprescree.com – removes your name from the </li></ul>pre-screening lists at the three major credit bureaus for five years.<br /><ul><li>https://powerpay.org/index.php - computer program that calculates how to save the most interest and time to pay off debt.
http://www.bankrate.com/brm/calc/MinPayment.asp - true cost of paying only the minimum payment.
http://www.bankrate.com/brm/calc/creditcardpay.asp?protype-cc – calculates how long it will take you to pay off your credit card with a certain payment amount each month or number of months until you want to have it paid off.
www.cardtrak.com – search different card options, featured cards and look through a credit card dictionary. </li></ul>18<br />
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