Credit and the Interest Insomniac
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Credit and the Interest Insomniac

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Credit and the Interest Insomniac Credit and the Interest Insomniac Presentation Transcript

  • Credit and the Interest Insomniac
    Using Credit Wisely
  • Housekeeping
    • Silence Cell Phones
    • Water
    • Restrooms
  • Why We’re the Experts
    Nationwide, non-profit
    Established in 1996
    Financial educators
  • Overview
    What Is Credit?
    Credit Reports & Scores
    Power of Interest
    Using Credit Wisely
  • What is Credit?
  • What is Credit?
    Free Loan!
    Status Symbol!
    Free Money!
    Helps Me Buy What I Can’t Afford
    EVIL!
  • What is Credit?
    NOT
    Money!
  • What is Credit?
    NOT
    a Loan!
  • What is Credit?
    • A Privilege, Not A Right.
  • What is Credit?
    • A Privilege, Not A Right.
    • Recognition
    Capability & Responsibility
  • What is Credit?
    • A Privilege, Not A Right.
    • Recognition
    Capability & Responsibility
    • Binding Agreement
    Your Promise (“Character”)
  • What is Credit?
    • A Privilege, Not A Right.
    • Recognition
    Capability & Responsibility
    • Binding Agreement
    Your Promise (“Character”)
    • A Financial Tool
  • Credit Reports and Scores
    Credit Report:
    • History record
    • Credit Bureaus (“for profit” companies)
    = Credit History = Credit Record = Credit File = “Credit”
  • Credit Reports and Scores
    Genuinely Free
    No Strings Attached
    No Credit Card Required
    www.AnnualCreditReport.com
  • Credit Reports and Scores
    Report includes:
    Identifying information
    Employer information (not income)
    Details of all credit lines and loans
    Public record
    Inquiries
    Personal Statement
  • Credit Reports and Scores
    Credit Score:
    300 - 850
    Based on report
    Indicates risk
  • Credit Reports and Scores
    Credit Score:
    300 - 850
    Based on report
    Indicates risk
    Higher is better
  • National Distribution of FICO Scores
    Excellent Credit generally from 750-775 on up
    Source: My FICO (a division of Fair Isaac): www.MyFICO.com
  • Disputing Errors
    At Credit Bureau Websites
    TransUnion, Experian, Equifax
    Credit Repair Companies?
  • Disputing Errors
    Dispute Errors
    Cannot Remove Accurate Negative Information
  • 5
    7
    8
    The 5 Areas a FICO Score Considers
    FICO = “Fair Isaac Company”(pioneer in the scoring formula)
  • What is Interest?
    %-based fee of balance owed
    “Rent” on money
    Related to RISK
    Fixed or Variable
  • The Power of Interest
    Purchase Furniture: $2,000
    3 years at 25% APR
  • The Power of Interest
    Purchase Furniture: $2,000
    3 years at 25% APR
    No Interest:
    $55.56/Month
  • The Power of Interest
    Purchase Furniture: $2,000
    3 years at 25% APR
    No Interest:
    $55.56/Month
    With Interest:
    $79.52/Month
    Total = $2,880
    $880 in Interest!!!
    44% More!!!
  • The Power of Interest
    Purchase Furniture: $2,000
    No Interest/No Payments
    For 3 Years
  • The Power of Interest
    Purchase Furniture: $2,000
    No Interest/No Payments
    For 3 Years
    Balance @ 3 Years
    $4,233!!!
    $2,233 in Interest!!!
    112% More!!!
  • What is Interest?
    The Main Thing to Remember About Interest…
  • Interest Never Sleeps
  • EVER
    Interest Never Sleeps
  • Interest Never Sleeps!
    Is that Good?
  • Interest Never Sleeps!
    Is that Good?
    Savings Plans & Investments
  • Interest Never Sleeps!
    The Second Thing to Remember About Interest!
  • Make Interest Work FOR You…
    Not AGAINST You!
  • Basics of Credit Cards
    Drive at speedometer’s top speed?
  • Basics of Credit Cards
    Drive at speedometer’s top speed?
    Max credit card’s limit?
  • Basics of Credit Cards
    Minimum payments 2-5%.
    • Lower minimum = longer pay off(20+ years)
    • Watch for FeesAnnual Program, Late, Balance Transfer, Over-Limit, Bounced Check, Card Replacement, Additional Card, Cash Advance, Pay by Phone, Activation, Account Maintenance, Foreign Exchange, Account Set Up, Membership, Insurance, Statement Copy, Expedited Card …
  • Basics of Credit Cards
    Grace periods =No Interest
    Balance Carry-Overs, Cash Advances & Convenience Checks-CANCEL GRACE PERIOD
  • Basics of Credit Cards
    Universal Default
  • Basics of Credit Cards
    Payment Holiday
    InterestNEVERSleeps
  • Dangers of Credit Cards
    • 60% of collegefreshmen MAX OUTcredit cards
    • US households pay $1,100 in credit card interest annually
    • Prepaid cards = Lots of Fees
  • Who Cares About Your Credit?
    Home & Auto Lenders
  • Who Cares About Your Credit?
    Landlords
  • Who Cares About Your Credit?
    More Employers
  • Who Cares About Your Credit?
    Car, Home &Life Insurance
  • Who Cares About Your Credit?
    Utilities &
    Cell Phone Providers
  • Living without a Major Credit Card
    Checking and savings accounts
    Have phone and utility report your payment history
    Retail and gas cards
    Secured Card
    Cosigner
  • Tips for Strengthening SCORE
    Dispute errors
    Budget
    Stay under 33% of credit limit!
    Contact creditors
    Avoid applying for a lot of new credit within a short period
  • Tips for Strengthening SCORE
    Shop for best rates
    Don’t close old accounts
    Pay down balances
    Get accounts “current”
    Pay bills on timeand in full.
  • Thank You for Attending!
    We are ALWAYS open to your Questions