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Quizzle's back to basics guidebook

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  • 1. Back to Basics Guidebooks
  • 2. Quizzle’s Back to BasicsGuidebooks Mortgage Basics Credit Improvement Basics Credit Reports and Scores Basics Identity Theft Basics How to Build Credit - An E-Book
  • 3. Quizzle’s Mortgage Basics
  • 4. Quizzle’s Mortgage BasicsGuidebook Table of Contents... 1. The Home Loan 2. Mortgage Rates 3. Mortgage Refinancing 4. Common Mortgage Questions 5. Quick Mortgage Tips GET THIS GUIDEBOOK!
  • 5. 1. The Home Loan
  • 6. 5 Questions Before Buying a Home1. Can you put 20 percent down?2. Do you have ample cash savings?3. Do you have a stable income?4. Do you have a good credit score?5. Do you plan to stay in the house for 5 years?
  • 7. You Found Your Dream Home… Now What? 1. What’s your living situation: renting or selling? Negotiate timing of close date 2. Get pre-approved for home loan—don’t wait to get financing in order 3. Make an offer! (Consider a real estate agent) 4. Provide documentation to mortgage lender 5. Finalize home loan after appraisal, title work, and close date
  • 8. The ‘Dos and Don’ts of Home LoansDO:1.Have access to ALL sources of assets needed for yourmortgage2.Provide two years of tax returns to your lender3.Keep relative income and credit info at handDON’T:1.Open new credit accounts2.Transfer large sums, deposit cash in accounts3.Have active disputes pending on credit report
  • 9. What to Look for When Selecting a Mortgage Banker1. Find someone you can trust: ask friends, family, and co-workers who may have worked with a mortgage banker and had positive experiences.2. Find some with expertise: look for an experienced banker—someone who answers your questions and who asks YOU questions. Choose someone who displays an understanding of the market, and is responsive to your calls, email, and other communications.
  • 10. The 3 Biggest Mortgage Mistakes 1. Failure to realize mortgage pricing changes—often rapidly, even within the span of a day 2. Working with a mortgage lender you don’t know or feel you can’t trust 3. Getting a quick quote and going with the lowest rate —a common, often costly mistake
  • 11. How to Streamline the Home Loan Process1. Know your credit status by getting free credit reports and scores through Quizzle2. Get income records ready: 1-2 paystubs within 30 days of application and two years of W-2s, (have 2 yrs of tax returns if self-employed)3. Have a 60-day transaction history of accounts, personal asset sales, stock/CD cash-outs, etc.4. If refinancing, make sure construction & remodeling projects are done by appraisal time
  • 12. Federal Housing Administration Basic Information1. Since 1934, the FHA has helped finance over 34 million properties2. FHA loans offer lower monthly PMI (private mortgage insurance) rates than traditional PMI payments3. FHA purchase loans offer as little as 3% down payments which can be “gifted” by close family4. While private loan qualifications have gone up recently, FHA loans still offer more relaxed guidelines
  • 13. 2. Mortgage Rates
  • 14. 3 Ways to Lower Your Mortgage Rate1. Improve Debt-to-Income (DTI) Ratio: your DTI is calculated by dividing monthly debt by monthly income--keep DTI to about 30%2. Improve Loan-to-Value (LTV) Ratio: your LTV is the loan you want to borrow divided by the value of the home—keep LTV to 80%3. Improve credit scores: make on-time payments, use only credit you need—but keep what you have, dispute inaccuracies, and limit new applications for lines of credit
  • 15. 5 Ways to Take Advantage of Low Mortgage Rates1. Get your free credit score with Quizzle2. Get your free credit report with Quizzle: an official Experian credit report, completely free, no strings3. Get organized: have paystubs, W2s, tax returns, employment history, bank statements, and other financial information ready for review4. Know what you can afford: examine your debt-to- income ratio and budget—make sure you can pay for what you want5. Start saving up for your down payment
  • 16. Is Owning a Home Really Cheaper than Renting?The short answer. Yes!The slightly longer answer… Yes, but it’ll take a minute.Renting may be cheaper than buying at first—with downpayments and closing costs—but over the long haul, yourmonthly mortgage payment will likely be lower than yourrent.Plus, as you pay your mortgage, you build equity—a realasset, whereas with rent, the money’s just sort of spentmonth-to-month with little to show for it.
  • 17. 3. Mortgage Refinancing
  • 18. 4 Reasons to Refinance1. Lower monthly payments by converting to a longer term mortgage2. Pay off the balance of your home loan faster3. Consolidate high-interest debts like credit cards to lower-interest mortgage debt4. Use equity to take cash out for other big expenditures, such as college tuition or retirement accounts
  • 19. 4 Considerations Before Refinancing1. Long-term costs: you do end up owing more on your mortgage, even if it’s at a lower rate2. Time frame: if you refinance a 15-year mortgage to a 30-year, it takes longer to pay off3. APR: besides just the interest rate, know the annual percentage rate (APR)—the real cost4. Other costs: in addition to closing costs, you will be on the hook to pre-pay interest on the mortgage, insurance, and taxes
  • 20. 4 New Types of Mortgage1. 40-year Mortgage: a longer term than 15 or 30 years allows for a lower monthly payment2. Hybrid: fixed interest rate to start, adjustable rate later —ideal for short-term owners3. Modification: owners ‘underwater’ or in tough financial straits can sometimes re-negotiate terms with lenders4. YOURgage: some lenders, like Quicken Loans, allow you to tailor-make your mortgage to fit your needs and lifestyle; a made-to-order loan
  • 21. Quick Refinancing Tips (Part I)1. Lock-in a rate for 45 days: when you start the refinancing process, your lender should offer a 45-day guaranteed interest rate; Close within that time frame so you get the rate you want2. Re-coup costs in 2 years: you should make up for the money you spend on closing costs, attorney fees, appraisals, etc. with lower monthly payments—ideally within 2 years3. Consider shorter terms: many people want to pay-off their loans sooner than the traditional 30-year time frame; YOURgages are popular tools to help with this
  • 22. Quick Refinancing Tips (Part II)4. “De-leverage”: while most fold closing fees into monthly payments, many now choose to pay these costs up-front5. Appraisal problems? Try a PIW: a “Property Inspection Waiver” can allow you to forego an appraisal and go with Fannie Mae and Freddie Mac’s home value estimation6. Want to refinance? Act soon: interest rates have never been lower, so if you want to refinance and have the credit, income, and equity—act as soon as possible!
  • 23. 4. Common Mortgage Questions
  • 24. Q&AQ: How important is my credit scoreto getting a mortgage loan?A: It’s always been crucial—but never more so than today. The housing market crisis has resulted in significantly tougher mortgage underwriting guidelines.
  • 25. Q&AQ: Is now the right time for me to buy a house?A: While it depends on your situation, mortgage rates have never been this low since long-term mortgages came out…in the 1950s! In the wake of the housing market crisis, your home-buying dollar has almost never bought more. If you want to buy a house, yes, your best time is right now!
  • 26. Q&AQ: What should I do if I’ve been denied amortgage?A: First, ask the person handling the application why you were turned down. Second, an appraisal may be the issue. Banks don’t accept another, so look for a new lender. Third, your DTI (debt-to-income) ratio may be high. Community banks may understand your situation better. Fourth, it could be your credit—the classic problem. Get free credit reports & scores with Quizzle so you know what repairs to make. Fifth, after you’ve done these things—re-apply!
  • 27. Q&AQ: What are Discount Mortgage Points and Should I Use Them?A: These are interest points paid up-front. (1 pt = 1% of total balance.) Say you qualify for a mortgage with 6% interest. Or you could pay 1 point and 5.25% interest…which is better? Divide the points by the rate difference. (1.00/0.75 = 1.33). That’s how long (in years) it takes to recoup pre-paid interest —making the points a wise choice if you stay in your home for 1 year, 4 months. After that, you’ll be saving money— regardless of the loan amount.
  • 28. Q&AQ: What is Mortgage Recasting?A: Mortgage Recasting is one of the best-kept secrets in the home loan world. Recasting is popular among homeowners that can’t necessarily qualify for refinancing. While recasting doesn’t change your balance or interest rate, it can lower monthly payments. In exchange for a lower payment, you typically pay a lump- sum upfront—usually starting at $5,000. You also pay a lender fee, generally around $250. The lender then amortizes the mortgage based on existing balance.
  • 29. Q&AQ: What’s a Reverse Mortgage?A: A Reverse Mortgage allows older homeowners age 62 or older to get cash from the equity they have in their home. Repayment isn’t required until the mortgage holder leaves the home. You can get cash as a lump sum, a monthly payment or a line of credit that you can use at your leisure. The amount you can borrow depends on your age, appraised home value and current interest rate. 
  • 30. Q&AQ: Can Changing Jobs Hurt my Chances of Getting a Home Loan?A: Yes, it could cost you. Don’t change jobs before you apply for a home loan. Also, now wouldn’t be a good time to become self- employed. The goal is to show lenders stability, which means you’ll be less likely to default on the loan. 
  • 31. 5. Quick Mortgage Tips
  • 32. 10 Tips for Buying and Selling Your HomeFor Buyers:1. Know your credit score: Quizzle alone offers both your free credit scores and reports2. Hold off on other big purchases: don’t apply for new lines of credit—it can lower your score3. Get a home inspection: know all the flaws in the home you’re buying or it could cost you4. Find the right neighborhood: the “three rules” of real estate are location, location, location!5. Budget for insurance: make sure you’ve factored these into the cost of buying
  • 33. 10 Tips for Buying and Selling Your HomeFor Sellers:1. Evaluate the need for a real estate agent: agents can help with paperwork, closing, etc.2. List a fair price: be reasonable or your house could be on the market longer than you want3. Complete some improvements: finish painting or landscaping—curb appeal makes an impact4. Offer incentives: offer to defray closing costs or possibly a higher sales commissions5. Review mortgage options: if you’re looking to buy a new house—know your borrowing ability
  • 34. Homeowner Tax TipsA Short List of Common Deductions: 1. Mortgage interest 2. Property taxes 3. PMI (private mortgage insurance) 4. First-time homebuyer credit
  • 35. How to Make Yourself Creditworthy1.35% of your credit score is based on payment history, so on-time payments boost scores2. 30% relates to balances, which have to be at manageable and reasonable amounts3. 15% is the length of relationships with creditors4.10% is credit types; scorers like different lines of credit--credit cards, student loans, auto loans, etc.5.10% is about establishing new credit; apply for new credit, preferably a type you don’t have yet
  • 36. 15- or 30-Year Mortgage: Which is right for you?Interest rates on 15-yr mortgages are typically lower thanthose on 30-yrs. Of course, that lower rate also comeswith higher monthly payments.The first half of the life of your mortgage goes mainly topaying interest. With a 30-year, you won’t be paying downprincipal until about 15 years in.In the long run, 15-yr mortgages are cheaper since youpay less interest. However, you’ll have larger payments—so be sure that fits in your budget. (Missed payments canjeopardize your ability to get another home loan later inlife!)
  • 37. Quizzle’s Credit Improvement Basics
  • 38. Quizzle’s Credit Improvement Guidebook Table of Contents...1. Credit Improvement Tips2. Credit Cards3. Debt Management GET THIS GUIDEBOOK!
  • 39. 1. Credit Improvement Tips
  • 40. 5 Steps to Improve Your Credit1. Pay all bills on time every month2. Use a small percentage of your available credit3. Monitor your credit reports & scores and dispute inaccuracies4. Don’t apply for numerous lines of credit in a short period of time5. Don’t close credit card accounts you don’t use
  • 41. 7 Credit Improvement Tips1. Pay Bills on Time!2. Pay old debts. You may have made a few mistakes, it’s OK, just pay off and stay current3. Pay down cards. You often need credit cards to build credit, pay them down (and off) reliably4. Spread it out. Spread debt across cards; try to keep balances capped at 30% of the limit5. Don’t close old accounts6. Don’t open new accounts you don’t need7. Check your credit regularly
  • 42. 6 Good Credit Tactics1. Restrict your credit card use2. Get a copy and review your credit report3. Pay off any delinquent accounts4. Keep credit card balances low5. Open new lines of credit sparingly6. Keep track of bills and pay credit cards off faster!
  • 43. Denied a Mortgage? Don’t Despair - Fix It!First, ask the person handling the application why you wereturned down. You’re entitled to know!Second, a bad appraisal may be the issue. Banks don’t acceptanother, so look for a new lender.Third, your DTI (debt-to-income) ratio may be high. Communitybanks may understand your situation better.Fourth, it could be your credit—the classic problem. Get freecredit reports & scores with Quizzle so you know what repairs tomake.Fifth, after you’ve done these things—re-apply!
  • 44. 2. Credit Cards
  • 45. How To Deal with Card Debt Charge card trouble get you into serious debt?•It’s OK! It happens. You may have to pay gradually, butavoid minimum payments. Interest piles up, makingmountains of mole hills. This wrecks credit scores over time.•Pay cards with the highest utilization (balance compared tolimit. Lower=better!). 50+% hurts credit scores. (Continuepaying other cards if possible.)•Next, pay high interest cards. Don’t charge more or opennew cards! As always, monitor your credit. Most debts dropfrom reports after 7 years.
  • 46. Starting to Rebuild Credit Suffered through tough times or bankruptcy?Most negative marks drop off credit reports after 7years. Bankruptcies can last 10. ‘Devalue’ negativemarks by paying them down and keeping currentwith bills, cards, and other debts.Next, get a secured card with a low fee structure.The deposit is refundable and doubles as your creditline. You won’t get in over your head. Make sure thecard you choose reports payments to the 3 creditbureaus—otherwise it doesn’t help.Keep new balances below 50% of the credit limit.
  • 47. 5 Reasons Store Credit is a Bad IdeaApplying for a store credit card to shave some money off a total? Consider this before you do!1. Interest is usually sky-high!2. Too many cards or applications hurt credit3. Cards can ONLY be used at that store4. They lack traditional card perks like extended warranties, rewards, purchase protection, etc.5. With less time to read fine print standing at the counter, you don’t know what you’re signing!
  • 48. Does Closing Credit Cards Help YourCredit?STOP! DON’T DO IT!Sure, it seems logical: “I had major credit card debt, but paid itoff. I’ll close my card to never deal with that problem again.”Except credit doesn’t work that way! If you’ve paid off yourcard and want to avoid future issues, stick it in a drawerand forget about it—but don’t close it!Your credit scores benefit from open credit lines—just notbig debts owed on them or late payments. Keep the car -just pay it off and leave it be!
  • 49. 3. Debt Management
  • 50. The ‘Snowball Strategy’: Paying Card DebtFaster? Finance expert Dave Ramsey’s personal formula… Contrary to most get-out-of-debt plans, you pay off the card with the smallest balance first, (while making minimum payments on all card debt). After that first card is paid, you take the amount you were shelling out on its minimum payment and tack that onto the second smallest balance you owe. Each time you pay off a debt in full, the amount you pay towards your next debt increases, allowing you to clear the debt faster.
  • 51. Bad Credit? Check Your Mirrors!Besides costing you a home loan, bad credit can take a major toll oninsurance rates—of all kinds.1.Auto, homeowner, and renter insurance all review yourcredit score to inform their rates2.Credit scores below 720 are in the most danger3.Some surveys show upwards of 80% of credit reportscontain errors4.26 States have laws protecting consumers from unfairinsurance scoring5.To avoid getting ‘blindsided’ by auto (or other)insurance--monitor your credit regularly 
  • 52. 4 Tips to Recover from Bankruptcy1. Don’t believe those saying they’ll get a bankruptcy entry removed from your credit reports; Inaccuracies can be fixed, but only time scrubs bankruptcy from a credit history2. Don’t give in to living a “cash only” life; You’ll need to rebuild your scores—use credit, just use it more responsibly this time3. Start writing down what you spend; Build greater self-control while re-building your credit scores4. Keep an emergency fund; Set-aside some money for unforeseen financial shortfalls so you never go back into bankruptcy!      
  • 53. 3 Quick Tips to Rebuild Credit 1. Get a savings-secured loan from local banks or credit unions. Give, say, $250 to a bank for a savings account. The bank lends you that amount, freezing your account as collateral. As you make payments, that amount is freed in your account. 2. Open a secured credit card. Your savings account acts as collateral, but is not “unfrozen” as you make payments. Keep your balance low. 3. Have someone make you an authorized user on existing credit lines. If a family member has existing credit cards with positive payment histories and low balances, ask them to make you an authorized user. 
  • 54. 5 Facts About Missed Card Payments1. Missed a payment? Don’t panic. Unless you’re 30+ days late, it won’t show up on your credit report.2. Late payments: First, there’s a fee (usually $15-35). Next, it’s reported to the credit bureaus--lowering your score. Then, after 60 days, your interest rate can be raised.3. The CARD Act of 2009 banned “universal default”, (Card ‘X’ could hike your interest if you were late paying Credit Card ‘Y’).4. First offense? Ask them to waive your fees. It may or may not work, but it’s worth a shot.5. Fix the problem—don’t run from it!
  • 55. Quizzle’s Credit Reports & Scores Basics
  • 56. Quizzle’s Credit Reports & Scores Guidebook Table of Contents... 1. Your Credit Reports & Scores 2. How to Build Credit 3. Managing and Protecting Credit 4. Credit Score Facts, Fictions, and Secrets GET THIS GUIDEBOOK!
  • 57. 1. Your Credit Reports & Scores
  • 58. Understanding Credit ReportsCredit scores are determined by several factors:1. Payment History: this shows if you pay on time, or if you’ve been delinquent; also shows bankruptcies and foreclosures2. Amounts Currently Owed: if you owe a lot of money on multiple accounts, you’ll be considered a higher risk3. Length of Credit History: a longer credit history is typically better than a shorter history4. New Accounts: opening new lines of credit in a short time can damage your scores5. Types of Credit in Use: your scores benefit from diverse lines of credit      
  • 59. Debunking 10 Credit MythsMYTH #1: Pulling your own credit report will hurt your score.MYTH #2: Your income factors into your credit score.MYTH #3: Closing a credit card account will help your credit score.     MYTH #4: You only have one credit score creditors and lenders use to judge credit- worthiness.MYTH #5: If you pay bills on time, there’s no need to check your credit report.
  • 60. Debunking 10 Credit Myths (cont…)MYTH #6: Paying off a past-due account will remove that item from your credit report.MYTH #7: Your checking, savings and investment accounts impact your credit score.MYTH #8: Paying cash for everything and having no credit card debt ensures a good credit score.      MYTH #9: Small debts like unpaid parking tickets and utility bills don’t affect your credit score.MYTH #10: Debit cards and pre-paid credit cards can help you build credit.
  • 61. Disputing Items on Credit Reports Credit report errors happen frequently. So, how do you find and fix them?1. Inspect, Line-by-Line: Review credit reports and make note of what you think is wrong. Try to verify suspect items.2. Follow the Directions: Read credit bureau dispute policies. Dispute by phone, fax, mail or online. Document it in writing; assign reasons for each disputed item (i.e., identity theft).3. Follow Up:  Creditors have 30 days to respond to disputes. Credit agencies act as liaisons between you and creditors. Once the creditor responds, agencies will notify you of findings.   
  • 62. Facts About Credit Report Freezes Victimized by fraud or identity theft? Here’s how credit freezes and fraud alerts work:1. A credit freeze can be requested from credit bureaus, essentially padlocking your credit report, making it inaccessible.• A fraud alert requires creditors to verify identity before issuing credit. Freezes deny access.1. It costs $3 to $10 to freeze reports. ID theft victims can apply for a no-cost freeze.2. A freeze blocks unauthorized access to credit and doesn’t hurt your score, but it can also block YOU from access, so use it carefully.  
  • 63. How Do Credit Inquiries Affect YourScores?The 2 types of Credit Inquiries are “Hard” and “Soft”:1. ‘Hard’ Credit Pull: These hurt credit scores. ‘Hard’ inquiries are when credit is pulled for new credit or loans, such as credit cards. The exceptions to hard pulls are inquiries made specifically for home or car loans. 2. ‘Soft’ Credit Pull: Unlike hard pulls, “soft” pulls will NOT affect your scores. This is when you go to a credit bureau or credit-related site like Quizzle to pull reports for your own use. Inquiries may show up on reports, but won’t factor into scores.  
  • 64. Beware Phony “Free” Credit Report & ScoreSites!The Federal Trade Commission (FTC) cracked down on so – called“free” credit report sites using false advertising andquestionable practices.The 2009 CARD Act aimed to reduce confusion in the freecredit report market. That confusion is used by shady companiesto hawk “free” reports that aren’t free, while chargingconsumers for products and services they didn’t want.In response, many of these sites now offer “free” scores inplace of “free” reports, (the law applies only to the reports!) Sobeware: deceptive practices continue, like offering “free”scores…after a sign-up for other services like credit monitoring..  
  • 65. 2. How to Build Credit
  • 66. How to Build Credit in 6 Easy Steps Building your credit history from scratch? Follow these 6 Easy Steps:1. Get a Secured Credit Card2. Only charge what you can afford to pay off in full3. Pay--on time--every month4. Avoid applying for numerous accounts5. Check your progress by checking your credit reports and scores6. After a year, apply for an unsecured credit card.  
  • 67. 5 Ways to Build Credit fromScratch1. Open a credit card account: Keep balance low enough so you can pay it off each month.2. Pay bills on time every month: This may seem obvious, but on-time payments are crucial to building scores.3. Be patient: It may take about 6 months after you’ve opened your first credit account before there’s enough information to tabulate a score.4. Check progress every 6 months: Monitor your scores regularly. Only Quizzle offers both free reports and scores - no strings attached.5. Only apply for credit you actually need.
  • 68. 3 Quick Credit Tips for Young People1. BEWARE FEES: Most credit card fees hit young people. Those fees pay for the perks enjoyed by older card holders.2. STUDENT LOANS CAN HURT: Education’s great, but loans are loans. PayPal co-founder Peter Thiel even likened college administrators to subprime mortgage brokers, selling student loans as ‘investments’ when they’re a big expense (so take your studying seriously!)3. RESTRAIN YOUTHFUL OPTIMISM: 85% of young adults think their finances will improve in the next year—just 35% of those 65+ years agree. This can lead young people to reckless spending and long-term hardships.  
  • 69. ‘Authorized User’ StatusIt’s called ‘piggybacking’: a formerly common way of boostingcredit by getting added as an ‘authorized user’ to accounts heldby those with better credit histories. Families used this methodfor years.But “credit repair” services prompted FICO to change scoringmethods and cards to adopt new standards—some stricterthan others. So now, the utility of the practice…well, dependson the card.American Express, with monthly payback safeguards, is moreforgiving. Bank of America, however, often rejects non-immediate family members. So examine each company’spolicies before adding or being added to an existent account.
  • 70. Help Your Kids Establish Credit1. Instill the work ethic early. A first job should be standard at an appropriate age.2. Open checking/savings account in their name. Explain how credit is built on financial responsibility. 3. Put small bills/utilities in their name. Paying gas, electric or phone bills builds credit/discipline.4. Get a secured card. Small credit lines through department stores build confidence and history.5. Co-sign for student loan. It’s only “good debt” if you pay on-time. Make sure they’re ready…and pay on time—or your score will take a hit too!
  • 71. A 5-Step Method to Build Credit1. Get a secured Credit Card2. Charge only what you can pay-Good credit means proving you pay what you owe. Start by charging only what you can pay off in full monthly.3. Pay on time each month-Most important for good credit is to pay bills and debt on time.4. Don’t apply for numerous accounts-Each time you apply for cards or a loan, your score takes a hit.5. Check reports and scores-After 6 mos., check your credit. Pay attention to your report—not just your score!
  • 72. 3. Managing & Protecting Credit
  • 73. 5 Ways to Prevent Identity Theft1. SHRED SENSITIVE DOCUMENTS – Thieves often steal personal information from the trash.2. KEEP SOCIAL SECURITY # SAFE – Don’t carry yourcard with you and give out your number only when absolutely necessary.3. MONITOR CREDIT REPORTS – If you can’t avoid IDtheft, detect it early to limit damage.4. BEWARE UNSOLICITED EMAIL – Don’t give out info in response to mail that may only look official.5. USE SOLID PASSWORDS – Pick combinations of upperand
  • 74. 7 Tips to Protect Credit at Holidays1. Check credit report before the holidays.2. Resist retail credit card offers at checkout.3. Keep your credit usage low; know your limits!4. Check your interest rates before you shop.5. Remain vigilant against identity theft.6. Don’t get distracted and fail to keep up with your bill- paying duties!7. As always, spend only what you can actually afford.
  • 75. Financial Disaster During a Divorce1. Make a realistic budget and learn to adjust to a new standard of living.2. Close joint bank and credit accounts before divorce and open new, separate ones.3. Check your credit report thoroughly before the divorce.4. Sell your house or valuable property if it is prudent and logical to do so.5. Be fair and mature—agreement is less costly than arguments and huge lawyer fees.
  • 76. Credit Might Be Your Best Choice• Your credit score displays your risk as a borrower to banks and other lenders.• Applying for new credit lines often is interpreted as high-risk behavior.• More credit applications appears as though you’re having difficulty getting a loan or are overextended.• Each time your credit is pulled, it is documented.• Pulling your score is called a ‘hard hit’, and hard hits take a toll on your score.
  • 77. 4. Credit Facts, Fictions, and Secrets
  • 78. 10 Quick Fictions About Credit1. Making more money improves my credit score.2. When I pay a debt, it drops off my credit report.3. The credit bureaus never make mistakes.4. Only paying in cash will help my credit score.5. All credit reports and scores are identical.6. Being good with bank accounts improves scores.7. Closing credit card accounts will help scores.8. Pulling your own credit reports will hurt scores.9. If a bill isn’t generally reported to the bureaus, skipping payments won’t hurt.10. Disputing true info keeps it off your reports.
  • 79. 4 Key Secrets of the 800+ Credit Score Crowd1. NEVER MISS PAYMENTS – Payment history accountsfor roughly a third of your credit rating.2. KEEP LOW BALANCES, HIGH LIMITS – Try to onlyuse 40% or less of your available limit.3. MIX IT UP! – Diversify credit lines with revolving credit (cards), installment credit (car, student loans), and, if you can, possibly a home loan.4. DON’T APPLY FOR NEEDLESS CREDIT – But if you already have unnecessary cards—don’t close them. That will hurt your score!
  • 80. 10 Credit Report Fictions1. Fiction: Pulling your own report hurts your score.• Fiction: Your income is factored into your score.• Fiction: Closing credit lines can help your score.• Fiction: You only have one credit report/score.1. Fiction: If you pay your bills, there’s no need to check your score.2. Fiction: Paying off an old debt removes it from your report right away.3. Fiction: Your bank account affects your score.4. Fiction: Paying in cash helps your credit rating.5. Fiction: Small debts (library fines, tickets) don’t affect your score.• Fiction: Debit & pre-paid cards can build credit.
  • 81. Identity Fraud Myths & PreventionMYTH: ID Theft only happens to others.MYTH: Criminals don’t know victims personally.MYTH: Most ID Theft occurs online.MYTH: Protecting Social Security # is enough.So, how can you effectively protectyourself?1. Never carry checkbooks around2. Monitor your credit regularly.3. Change your passwords routinely.4. Shred sensitive documents.5. Use anti-virus software.
  • 82. PreventionMYTH: ID Theft only happens to others.MYTH: Criminals don’t know victims personally.MYTH: Most ID Theft occurs online.MYTH: Protecting Social Security # is enough.So, how can you effectively protect yourself?1. Never carry checkbooks around2. Monitor your credit regularly.3. Change your passwords routinely.4. Shred sensitive documents.5. Use anti-virus software.
  • 83. Quizzle’s Identity Theft Basics
  • 84. Quizzle’s Identity Theft Basics Guidebook Table of Contents...1. Identity Theft and Your Credit2. How to Avoid Identity Theft3. Fixing Your Credit After Identity Theft GET THIS GUIDEBOOK!
  • 85. 1. Identity Theft and Your Credit
  • 86. Identity Fraud Myths & PreventionMYTH: ID Theft only happens to others.MYTH: Criminals don’t know victims personally.MYTH: Most ID Theft occurs online.MYTH: Protecting Social Security # is enough.So, how can you effectively protectyourself?1. Never carry checkbooks around2. Monitor your credit regularly.3. Change your passwords routinely.4. Shred sensitive documents.5. Use anti-virus software.
  • 87. Identity Theft: By the Numbers• 1 in 1.43 (70% of) U.S. ADULTS use the internet regularly. That’s 175 million people.• 1 in 1.45 (69% of) U.S. ADULTS make purchases online.• 1 in 18.22 (5.5% of) HOUSEHOLDS experience an identity theft.• 1 in 5.56 (18% of) I.D THEFT VICTIMS suffer long- term problems, usually due to multiple incidents of fraud, not caught until it’s too late.• 1 in 21.28 (4.7% of) I.D. THEFT VICTIMS lose $5000 or more due to the theft.• 270,000 I.D. THEFTS REPORTED to the Federal Trade Commission last year alone.
  • 88. Taxes & Identity:How to File One and Protect the Other1. ONLINE SECURITY: Before filing returns online, make sure the address starts with “https.” The ‘s’ at the end of ‘http’ means secure server, which encrypts personal information.2. AVOID EMAIL & FILE SHARING: Never email copies of returns to anyone, even the IRS. Also, avoid using file sharing sites to send returns. 3. MAIL SECURELY: When submitting returns via snail mail, don’t put them in a personal mailbox with the flag up— you’re signaling thieves there’s information for the taking. Mail from a post office location.
  • 89. 5 Reasons to Stop Fearing Your Credit ReportMany avoid credit reports because they fear what’s there. Don’t panic! Here’s why:• It’s usually not that bad. Many things you may be worried about might not have even been reported to the bureaus. Get over your fear and take a look!• Self credit checks don’t hurt. Many still think pulling their own report hurts their score. Not so!• Mistakes are common. Maybe you’ve made some mistakes—but odds are, so have the bureaus!• Bad credit will only get worse. Stop credit score hemorrhaging by knowing what to work on.• Credit improvement isn’t that hard. Maybe you are in bad credit shape. Get to work fixing it!
  • 90. 2. How to Avoid Identity Theft
  • 91. 4 Things to Look for on Your Credit ReportLook for these red flags on your credit reports:1. Personal info that’s wrong. Is your name right? Address correct? Mix-ups happen, and that can mean trouble for your scores.2. Public records inaccuracies. Judgments, bankruptcies, and liens stay on reports for a fixed amount of time. If they stay too long, they can hurt.3. Unfamiliar accounts/activity. See accounts you don’t recognize or you closed? Red flag! Someone could be using them without your knowledge.4. Lingering inquiries. Credit inquiries from new credit lines, insurance companies, and employers should tick off reports after two years.
  • 92. 10 Quick Ways to Stop ID Theft Cold1. Be alert; shield your PIN# from sight2. Don’t carry your Social Security card3. Send/receive sensitive mail from Post Offices4. Review all financial statements carefully5. Shred all unwanted personal documents6. Review credit reports regularly7. Rarely (if ever) give personal information out over the phone8. Don’t carry more credit cards than you need9. Use a filing system so you know where important information is at all times10. Use caution when making purchases online
  • 93. 3 Common Scams to AvoidAUTO SCAMSBeware of these red flags: • Out-of-state vehicles • Dealers requiring that you wire them money • Prices that seem “too good to be true”ONLINE SCAMSBeware of: • Phishing” sites that look like your bank’s • Emails asking you to update information • Requests to reply to, or downloading things from, unsolicited emails. Call the company’s official, direct phone number if you’re suspicious)PHONE SCAMSIf someone calls, threatens legal action, or claims to be law enforcement: • Place fraud alerts on cards and credit reports • Report the matter to your local police department
  • 94. 10 Ways to Protect Your HomeBurglars don’t just steal valuables, heirlooms and property - they can also stealyour identity.1. Get a home security system2. Secure all windows and other openings3. Keep property well-lit4. Keep a tidy yard and deny thieves hiding places5. Don’t show off empty boxes from new purchases in the trash!6. Protect your identity; keep info in lockboxes, shred unwanted documents7. Burglars like unoccupied homes; make your house seem ‘lived In’ with lights on timers, etc.8. Make friends with trusted neighbors9. Keep inventory of valuables, in case of burglary10. ‘Think like a thief’—examine home’s vulnerability
  • 95. 3. Fixing Credit After an Identity Theft
  • 96. 10 Steps to Fight Identity Theft1. File a police report or affidavit stating your ID has been stolen or compromised2. Obtain copies of your 3 credit reports3. Make studious notes of suspicious activity4. File disputes on suspect items with each bureau5. Follow-up with each credit bureau6. Notify bureaus—in writing—and request a fraud alert be placed on your credit7. Put a freeze on your credit, denying unauthorized access8. Contact the Federal Trade Commission and insist fraudulent accounts be closed9. If thieves opened new cards, contact issuers and insist they be closed10. Notify bill collectors of pending fraud situation
  • 97. 7 Ways to Respond to Identity Theft1.Place a fraud alert on your credit reports2.File a complaint with the Federal Trade Commission3.File a police report or sworn affidavit4.Contact and notify banks and creditors5.Keep good records and make an ID Theft file, documenting the process6.Contact the post office in case of stolen mail7.Notify the Social Security Administration about the identity theft
  • 98. 5 Ways to Protect Yourself from Cybercrime1. Don’t save credit card information online. Use sophisticated passwords and don’t save credit card numbers on online store accounts.2. Keep credit card numbers and PINs to yourself. Never write PIN #s on credit cards!3. Beware of Wi-fi networks. Be sure to change the password on your wireless router.4. Be careful what you post on social media. This is pretty self- explanatory. Play it safe.5. Make sure you’re protected at work. Having a separate computer workstation for financial interactions and processing is a good idea. 
  • 99. Fraud Alerts vs. Credit FreezesIf you suspect you’ve been the victim of identity theft, you can requesta credit freeze from the credit bureaus to essentially seal your creditreport. This makes credit reports inaccessible, unless you give specificauthorization.With a fraud alert, a notice is placed on your credit file requestingcreditors verify your identity before issuing credit in your name. This usuallyinvolves a phone call.It typically costs $3 to $10 to freeze your credit report. However, if you’vebeen a victim of identity theft, you may be able to freeze at no cost. Thecosts vary by state.How do I lift the freeze when needed?A temporary lift can be used when you need a third party to access yourcredit, typically lasting 7, 15, or 30 days. A permanent lift means youwant your credit information to be available for third parties without timerestrictions.
  • 100. 7 Tips to Protect Credit at Holidays1. Check credit report before the holidays.2. Resist retail credit card offers at checkout.3. Keep your credit usage low; know your limits!4. Check your interest rates before you shop.5. Remain vigilant against identity theft.6. Don’t get distracted and fail to keep up with your bill- paying duties!7. As always, spend only what you can actually afford.