“ That’s GREAT that you want to collect money from me on that credit card account with the 24% APR interest charges… Do you have something to write with? Write this down: Bankruptcy #97-11852WWB, and don’t ever call me again!” Slide
Seem to eliminate your ability to borrow money without being scorned, humiliated and ridiculed.
Make it seem impossible to get a fresh financial start when being repeatedly turned down for loans.
Prevent you from buying a home without paying usurious interest rates and loan fees that seem to exceed the national debt.
Prevent you from being able to buy a new car, or any vehicle at a fair price, with financing at an interest rate that is less than what loan sharks charge.
Make you feel like debt collection starts happening before you get approved for the loan, being harassed just for trying to get one and experience negative creditor reactions for trying to live a normal American lifestyle.
Make it necessary to pay a big deposit to start new utility service.
Credit Reporting Subscribers… Who’s Looking at your Credit?
Normally credit reports are used for business purposes. However, anyone with a "permissible purpose" can gain access to your report, including:
Employers and potential employers (with your written consent)
Companies with which you have an existing account, for monitoring purposes.
Those groups considering your application for a government license or benefit
A state or local child support enforcement agency
Any government agency (may be allowed to view only certain portions like name, address, current and former employers)
Those who uses your credit report to provide a product or service which you have requested
Someone that has your written authorization to obtain your credit report
Your BK eliminated your outstanding debt… So why do you want to rebuild your credit?
You would like to buy a home and simply get a fair interest rate on the mortgage
You would like to buy a new car, truck or late model used vehicle without having some sleazy acting car salesman tell you why a BK means you’re going to have to pay full list price, lots of money down and an interest rate over 30% APR
You would like to have the freedom to do what you want in life without the label of “You have a BK on your credit report” constantly being thrown at you as if you are some kind of financial leper
If you needed to get through a maze, and the quality of your life depended upon it… Would you follow the guy that already learned how to find his way through it? Slide
Rebuilding Your Credit Rating 1. Acquisition Of Debt 2. Repaid As Scheduled 3. Good Credit Rating & FICO Score
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance. Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance. Models can be developed from different sources of data. Credit-bureau models are developed from information in consumer credit-bureau reports.
Pay your bills on time. Late payments and collections can have a serious impact on your score.
Do not apply for credit too frequently. Having a large number of inquiries for different types of loans on your credit report can worsen your score.
Reduce your revolving charge and credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
Review your credit bureau reports with a certified credit counselor and discuss possible inaccuracies that merit opening up an investigation or the addition of consumer comments into the report.
What if there is an error on my credit report?
If you see an error on your report, report it to the credit bureau.
Trans Union 1-800-916-8800
Pay down 90 - 100% of revolving balances If the starting FICO score was: 670 Then, based on this action the simulated FICO score could be in the following range: Provided by myFICO® If the starting FICO score was: 640 Then, based on this action your FICO score could be in the following range: Pay down 90 - 100% of revolving balances 700-740 How revolving accounts (credit cards, department store credit cards, revolving lines of credit) are managed is heavily weighted in the FICO score. FICO scores evaluate revolving accounts in a variety of ways, including comparing balances to available credit, as well as looking at the number of accounts with a balance. A general rule to remember: consistently carrying lower balances on revolving trade lines will generate positive points for a FICO score. This simulation was based on paying down 90 - 100% of revolving balances.
Pay down 90 - 100% of revolving balances If the starting FICO score was: 670 Then, based on this action the simulated FICO score could be in the following range: Provided by myFICO® If the starting FICO score was: 640 Then, based on this action your FICO score could be in the following range: Pay Bills On Time for the next 6 months 660-700 Paying bills on time is a substantial factor that can affect a FICO score. Generally speaking, a score will remain stable as bills are paid on time. If there is some history of late payments, how recently they occurred is important. The more recently they happened, the more impact they can likely have on a score. As they age, their impact on a score can gradually lessen. This simulation was based on making payments on all bills for the next 6 months.
Pay down 90 - 100% of revolving balances If the starting FICO score was: 670 Then, based on this action the simulated FICO score could be in the following range: Provided by myFICO® If the starting FICO score was: 640 Then, based on this action your FICO score could be in the following range: Pay Down Balances 680-720 Having revolving accounts (credit cards, department store credit cards, revolving lines of credit) with balances is heavily weighted in the FICO score. FICO scores evaluate revolving accounts in a variety of ways, including comparing balances to available credit, as well as looking at the number of accounts with a balance. A general rule to remember: having outstanding revolving credit balances hurts your FICO score, paying them off raises your FICO score. This simulation was based on paying down $1500 of overall balance.
Pay down 90 - 100% of revolving balances If the starting FICO score was: 670 Then, based on this action the simulated FICO score could be in the following range: Provided by myFICO® If the starting FICO score was: 640 Then, based on this action your FICO score could be in the following range: Pay an Installment Loan as Agreed 685-725 Making timely payments on installment accounts such as auto, marine and RV loans is heavily weighted in the FICO score. FICO scores evaluate installment accounts in a variety of ways, including comparing beginning balances to current payoffs, as well as looking at the number of payments made on time. A general rule to remember: having outstanding installment loans with a history of current payments raises your FICO score. This simulation was based on 12 monthly payments on a $15,000 loan.
Are you making payments on the same car that you had when you filed for Bankruptcy? Slide “ Money Down the Drain”
How do we acquire the Right Kind of Debt after a Bankruptcy? Good Debt vs. Bad Debt?
“ See the Future” through the eyes of those who passed this way before us…
Automotive Lender Maximum Loan Advance Guidelines
Wholesale Kelly Book value
Net Impact: Maximum Loan amount will not cover dealer profit requirements… Unless, customer has exceptionally good credit, then dealer can get more loan advance from lender based on credit score!
The first step in acquiring “good debt” is to begin preparing your stipulation portfolio Your record of steady income and your personal investment into acquiring the collateral is the first place to start Proof of Income Including current pay stubs, bank statements, 1040’s, Schedule C’s Down Payment or Trade-In > enough to cover Tax, License & Fees
3 Years Work History including addresses and phone numbers Proof of Income Including current pay stubs, bank statements 1040’s, schedule C Down Payment or Trade-In Your work history and proof of income are the most important part of verifying your ability to repay your loan 2
3 Years Work History including addresses and phone numbers Proof of Income Including current pay stubs, bank statements 1040’s, schedule C Down Payment or Trade-In 4 – 8 Full Personal References including addresses and phone numbers Never underestimate your credibility gain from multiple and detailed references 3
3 Years Work History including addresses and phone numbers Proof of Income Including current pay stubs, bank statements, 1040’s, Schedule C Down Payment or Trade-In 4 - 8 Full References including addresses and phone numbers Residency: Utility bills, voter registration, Phone bills, Cable TV bills Paying your domestic bills on time can be leveraged as evidence of “Credit History” 4
3 Years Work History including addresses and phone numbers Proof of Income Including current pay stubs, bank statements, 1040’s, Down Payment or Trade-In 4 - 8 Full References including addresses and phone numbers Residency: Utility bills, voter registration, Phone bills, Cable TV bills Proof of Insurance & Drivers License Vehicle Sale and Finance Terms, Budget, Rent, Insurance, car payment, all reported debt in Line with Lender Program 5
It lurks in card dispensers, spits out your card, and keeps your money. Its adverse influence creates chaos on the magnetic strip, and then your card ceases to function - or it functions too well, causing funds to flow to mysterious recipients. Payments you make will be re-routed to the wrong destination…
Credit Score Analysis About your Credit Score: Your Credit Score is formulated using the information in your credit file. Your score helps potential lenders, landlords, and employers quickly gauge your credit history and decide what kind of a risk they are taking if they approve your application. Your Credit Score can range between 330 and 830, with a higher score indicating a lower risk. There are many scoring models used in the marketplace. The type of score used, and its associated risk levels, may vary from lender to lender. But regardless of what scoring model is used, they all have one purpose: to summarize your creditworthiness. Keep in mind that your score is just one factor used in the application process. Other factors, such as your annual salary and length of employment, may also be considered by lenders when you apply for a loan. What your Credit Score means: Your credit factors indicate that you will likely be seen as having average credit. Lenders may want to review potential trouble areas in your credit history and may require additional documentation before approving a loan. Offers, such as auto loans, may have higher interest rates and may require a higher initial down payment. You can increase your chances of receiving more favorable credit card and loan offers by building a history of good credit behavior. Provided by myFICO® Handout
What this means to you: Credit scoring helps companies better understand how to serve you. And the overall benefits of credit scoring are passed on to the consumer, such as faster credit approval, reduction in human error and bias, consistency, and better terms and rates for you through reduced costs and losses for lenders. While lenders may use different scoring models to determine how you score, and each major credit bureau has its own method for calculating credit scores, the scoring models have been fairly well standardized so that a score at one bureau is roughly equivalent to the same score at another. Below are common factors that are both positively and negatively affecting your Credit Score. Provided by myFICO® Handout
You have a good cushion of available credit between your current balance and your credit limits on all open trades. This has a positive affect on your credit score. This cushion shows lenders that you are unlikely to overextend yourself financially. If you keep paying your bills on time and keep your credit balances low, you will likely continue to enjoy a positive credit score. (P-I)
You have at least 2 or more open major credit cards, such as VISA or MasterCard, on your credit report. This often tells lenders that you are a responsible borrower and they may be more likely to see you as a good credit risk and extend you credit. (P-E)
Your credit report does not contain negative public records, such as a bankruptcy, lien, lawsuit or judgment filed within the last two years. This is having a positive impact on your credit score. Although public record items may remain on your credit report for seven to 15 years, depending on the item, an important piece of your credit history is paying your bills on time, every time. (P-B)
You have worked a long time building a credit history, which is having a positive impact on your credit score. Having a history of long-term credit accounts that you consistently pay on-time is one way that lenders view your financial responsibility. Maintaining positive credit behavior will help you maintain a good score. (P-C)
Provided by myFICO®
What factors lower your Credit Score: Your payment history shows one or more payments that were late by 30 days or more. Late payments count negatively against your credit score. If you want to improve your score, one of the best ways is to pay all your bills on time, every time. Although negative information can stay on your credit report for up to seven years (up to 10 years for bankruptcies and 15 years for unpaid tax liens), if you pay overdue bills and make payments on time, your good efforts to improve your credit habits may be recognized by lenders. (N-A) Provided by myFICO® Handout
It is important to frequently review your credit file to verify the following:
Social Security Number
Date of birth
All the accounts listed are your own
Outstanding balances/limits on the accounts
Derogatory credit information has been deleted after the appropriate amount of time
Provided by My Complete Credit .com® Handout
Why should I review my credit files from all three credit reporting agencies? Each credit bureau records information it receives from your creditors. You can’t control which credit reporting agency (Equifax®, Experian® or TransUnionSM) your lender uses, so prepare yourself by checking your credit files and credit scores from the three credit reporting agencies for accuracy. What is a credit score? A credit score is based on variables in your credit file that help determine your creditworthiness. The credit scoring number is based on various factors, including the number of trade lines you have open, the number of late payments, delinquencies, etc. Lenders look at your credit file and other factors to determine your creditworthiness. Provided by My Complete Credit .com® Handout
Why is my credit score so important? Lenders carefully consider your credit score because it provides them with an objective measure of your creditworthiness. Your credit score can be impacted by many factors such as late payments, delinquencies or high amounts of debt. Lenders may deny your loan or charge you a high interest rate if you have a low credit score. If you have a good credit history, you may have more options available to you resulting in lower interest rates and potentially big savings. Lower loan rates can mean thousands of dollars in your pocket over the years. If you purchase a home for $250,000 at 8.3% interest you will pay $679,306 over the course of a 30-year mortgage. At 6.5 % interest, however, you will pay only $568,861 — a savings of $110,445. Handout Provided by My Complete Credit .com®
Pay your bills on time. Creditors scrutinize your credit history. If you pay your bills on time, this reflects well on you. If you have a record of late payments, you might want to consider credit counseling on how to better manage your finances.
Don’t over-apply for credit. Each credit card application shows up as an inquiry in your credit report. If you’re comparison shopping for the best rate on a single purchase (home or car), that’s OK. Too many inquiries for a wide range of revolving or unsecured accounts can be viewed as a desperate bid to obtain credit to get out of financial trouble.
3. Manage your debt. Your debt/income ratio — the percentage of your income that goes to paying off debt — is another gauge of your financial health. You can calculate this ratio by dividing your monthly minimum debt payments (excluding mortgage) by your monthly take-home income. If your debt payment absorbs:
Less than 20% of your income, you are great
Between 20% to 35% - consider reducing your overall debt
More than 35% - consider credit counseling or some type of aggressive debt-reduction strategy
Provided by myFICO® Handout
6 Steps to Better Credit (continued) 4. Shred your documents. Be sure to destroy any piece of paper with Social Security Number or credit card numbers. Thieves often go through garbage retrieving people’s identification so they can use this information to commit credit fraud. 5. Don’t give information away. Never include your Social Security number on checks or driver’s license. Be extremely cautious how you use your Social Security number; it is your key personal identification number that is a gateway to your personal identity. If required to provide this information, always ask if there is another option. Provided by myFICO® Handout
6 Steps to Better Credit (continued) 6. Check your online credit report and credit score on a regular basis. The only way to protect your name and credit is to be proactive. With the rise of identity theft cases, it is important to review your credit files, and to report any inaccuracies to the major credit reporting agencies. When consumers access their own credit reports, it does not count as a lender inquiry. Provided by myFICO® Handout