Don't be haunted by credit mistakes


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Don't be haunted by credit mistakes

  1. 1. Don’t be Haunted by Credit Mistakes Ways to keep your credit from haunting you Presenter: Barbara Stark
  2. 2. Does this look familiar? <ul><li>Kids lie awake at night because of monster movies… </li></ul><ul><li>Parents lie awake at night because of the budgetary boogeyman… </li></ul>
  3. 3. What is a Credit Score? <ul><li>A credit score in the United States is a number representing the creditworthiness of a person or the likelihood that person will pay his or her debts. </li></ul><ul><li>FICO score breakdown: </li></ul><ul><li>35% Credit History </li></ul><ul><li>30% Amount Owed </li></ul><ul><li>15% Length of Credit History </li></ul><ul><li>10% New Credit </li></ul><ul><li>10% Type of Credit </li></ul>
  4. 4. Don’t be a Werewolf about bills: <ul><li>Just like a werewolf's full moon, bills come around every month </li></ul><ul><li>If we prepare for them in advance then the thought of paying them doesn’t have to turn us into werewolves </li></ul><ul><li>Largest part of your credit score is related to your payment history </li></ul><ul><li>Make a calendar of when your bills are due and create a spending plan to pay each on time </li></ul>
  5. 5. Month: October 2010 Sunday Monday Tuesday Wednesday Thursday Friday Saturday 4 5 $100 car insurance 6 7 $80 Light Bill 8 $50 cell phone 9 10 11 12 $25 gas 13 13 $ 30 Cable Bill 14 15 16 17 18 19 $150 car payment 20 21 $20 Visa 22 23 24 25 $25 gas 26 27 28 $20 Sun Pass 29 $40 Mastercard 30 31
  6. 6. Beware of Zombie Credit Card Accounts <ul><li>30% of your credit score is the total debt owed </li></ul><ul><li>Be sure to pay down your debt </li></ul><ul><li>Maxing out credit cards or moving debt from one account to another just feeds the debt with interest charges and keeps it alive long after you could have killed it off </li></ul>
  7. 7. Vampires and Credit Histories Live Forever! <ul><li>Length of credit history makes up 15% of your credit score </li></ul><ul><li>Considering closing accounts that you don’t use anymore? Think twice </li></ul><ul><li>How long you’ve had credit affects your score </li></ul><ul><li>As long as you don’t use the credit cards that often, you don’t have to worry about them sucking your budget dry </li></ul>
  8. 8. Watch out for that wand! <ul><li>New credit accounts for 10% of your credit score </li></ul><ul><li>It’s not a good idea to open several new accounts at once </li></ul><ul><li>With all the free credit card offers around, you don’t need a witch or a wizard to make new accounts appear but beware of the spell- it may put your score under! </li></ul>
  9. 9. Who you gonna call? <ul><li>The final part of your credit score, 10%, is based on the type of credit you have such as revolving credit used by credit card companies and secured credit obtained for major purchases such as cars and home. </li></ul><ul><li>It’s a good to have a mix to avoid getting slimed by a low credit score. </li></ul>
  10. 11. Don’t act like you live in a haunted house… <ul><li>Number one mistake you can make to destroy your credit is to ignore or hide from problems that may arise. </li></ul><ul><li>Not answering your phone or opening your mail will NOT make the problem invisible or go away. </li></ul>
  11. 12. Invasion of the body snatchers… <ul><li>Identity theft can make a mess out of your life and your credit score. </li></ul><ul><li>Guard your private information by shredding credit card offers and old financial records and never giving out personal information such as your social security number. </li></ul>
  12. 13. It’s ALIVE! <ul><li>While your credit history may not actually be alive, it does change as time goes by and can get easier to live with or, if your not careful, it can turn into a monster. </li></ul><ul><li>Keep your eye on it by reviewing your bills and bank statements as they come in, monitoring your credit reports regularly and using credit responsibly. </li></ul>
  13. 14. Let’s Recap… <ul><li>1. What is a credit score? </li></ul><ul><ul><li>A credit card </li></ul></ul><ul><ul><li>Frankenstein's IQ level </li></ul></ul><ul><ul><li>Number representing the creditworthiness </li></ul></ul><ul><ul><li>A letter representing your character </li></ul></ul>
  14. 15. <ul><li>2. What does the largest part of your credit score represent? </li></ul><ul><li>The number of times you have applied for a credit card </li></ul><ul><li>A vampires’ fangs </li></ul><ul><li>Your GPA level </li></ul><ul><li>Your payment history </li></ul>
  15. 16. <ul><li>3. 30 % of your credit score represents how much money you have paid to eliminate your debt. </li></ul><ul><li>True </li></ul><ul><li>False </li></ul>
  16. 17. <ul><li>What information should you keep secure in order to avoid Identity theft? </li></ul><ul><ul><li>Your secret identity </li></ul></ul><ul><ul><li>Dracula’s layer </li></ul></ul><ul><ul><li>Your goblin’s existence </li></ul></ul><ul><ul><li>Your social security number </li></ul></ul>
  17. 18. American Debt Counseling, Inc. 1 888 DEBT USA THANK YOU!