Credit ... By: Daniel Sanchez Yuma Private Industry Council Workshop Presenter Your Job May depend on it
Find out what is meant when they tell you about your credit score.
How can credit affect you
How to maintain your credit.
Where to start when you don’t have credit.
Barriers that can affect you financially.
What to avoid
What you can do
How to repair your credit
WHAT THE HECK IT CREDIT?
a system creditors (people who lend you money) use to help determine whether to give you credit, and how much to charge you for it.
Helps predict how creditworthy you are; how likely it is that you will repay a loan and make the payments on time.
Generally, the lower the risk, the higher your score.
You can get your credit score from the three nationwide credit reporting companies, but you will have to pay for them:
Equifax 1-800-685-1111 equifax.com
Experian 1-888-397-3742 experian.com
TransUnion 1-800-916-8800 transunion.com
What make the Credit “Score” according to The Federal Trade Commission
How Credit Effects You
Many Employers are now checking your credit score
Bad scores can keep you from getting jobs
You may not be able to get loans
What changes “THE SCORE”
Have you paid your bills on time?
Are you maxed out?
How long have you had credit?
Have you applied for new credit lately?
How many credit accounts do you have and what kinds of accounts are they?
To Maintain Your Credit
Be Stable - No more then 2 address for past 5 years; stay in one job
Maintain a Good Pay history - Accounts are current, paid on time, and/or paid in full as agreed.
Keep Your Debt to Income Low– Not maxed out on credit lines or credit cards
No Collection – No Judgments – No late payments
Keep Credit Inquiries Low– No more than 3 a year.
How to Start
Start Small then work up:
Savings Account – used as source of collateral
Checking Account – Show discipline with money
Shared/Passport Secured Loan (a borrower or co-signer secures the loan with funds from a share savings account. )
Debit Card – Responsible use helps financial institutions decide to give you an actual credit card
Pre-paid credit cards
Credit Card/Department store cards
Signature Loans - loan not backed by collateral; personal loan
Secured Loans – tied to something you own
Barriers That Come Up
Death in the family
Loss of income
Cut in wage/hours at work
What Makes You Look Bad
No credit – This is when you have no type of credit.
To much credit – To many credit cards, loans, or lines of credit. With or without balances. Potential debt.
Having many jobs and/or addresses – Instability is shown when you move to often or have many different jobs.
No Savings – living beyond your means
Bad Pay History – payments are behind or have been behind.
Having Judgments Against You– bills that have been sent to attorneys for collection.
Improving Your Score
There is no quick fix.
It takes time and work to improve your score
Get copies of your credit report (1 Free a Year) from annualcreditreport.com
Send a letter to the credit agencies and creditors asking to fix inaccuracies, with proof of inaccuracy
If needed, contact you creditors to add accounts to your file ( for “insufficient credit file” or “no credit file.”
What you can do continued…
Your best bet always is to contact your creditor directly and as soon as you are having problems making payments.
Check with local programs for assistance
Western Arizona Council of Governments
Money Management International
More Steps You Can Take
Create and stick to a budget
Take control of your spending or get help if you cannot
Change your spending first – cut cable, internet, subscriptions, and personal things (nails, hobbies, etc.)
Income – stop unnecessary withholdings, talk to tax advisor, take on odd or part-time job is possible.
Remember this is short-term!
Credit counseling from a reputable organization (Remember what to watch our for)
Bankruptcy (LAST RESORT!!!!!)
What to avoid
Companies or Programs That :
Charges fees before it settles your debt . Starting October 27, 2010, companies that sell debt relief services by phone cannot charge or collect a fee before they settle or reduce your debt.
Promises that unsecured debts can be paid off for pennies on the dollar. No guarantee that any creditor will accept partial payment of a legitimate debt.
Requires substantial monthly service fees and demands payment of a percentage of what they’ve supposedly saved you. You man end up paying more in fees than if you paid your original debt
Tells you to stop making payments to or communicating with your creditors. If you stop making payments on a credit card, expect late fees and interest to be added to the amount you owe each month.
Claims that creditors never sue people for not paying their unsecured debts. Creditors may have the right to sue you to recover the money you owe. The can also garnish your wages or put a lien on your home.
Claims that they can remove accurate negative information from your credit report. The truth is that no company or person can remove negative information from your credit report that is accurate and timely. It’s illegal.