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  • 1. You can count on payment history to be a significant factor. If your credit report indicates that you have paid bills late, had an account referred to collections, or declared bankruptcy, it is likely to affect your score negatively. 2. Many scoring systems evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, it’s likely to have a negative effect on your score. 3. Generally, scoring systems consider the length of your credit track record. An insufficient credit history may affect your score negatively, but factors like timely payments and low balances can offset that. 4. Many scoring systems consider whether you have applied for credit recently by looking at “inquiries” on your credit report. If you have applied for too many new accounts recently, it could have a negative effect on your score. Every inquiry isn’t counted: for example, inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not considered liabilities. 5. Although it is generally considered a plus to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many scoring systems consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may have a negative effect on your credit score.
  • Explain that trade line – why each inquiry should have active account.
  • Credit

    1. 1. Credit ... By: Daniel Sanchez Yuma Private Industry Council Workshop Presenter Your Job May depend on it
    2. 2. Overview <ul><li>Find out what is meant when they tell you about your credit score. </li></ul><ul><li>How can credit affect you </li></ul><ul><li>How to maintain your credit. </li></ul><ul><li>Where to start when you don’t have credit. </li></ul><ul><li>Barriers that can affect you financially. </li></ul><ul><li>What to avoid </li></ul><ul><li>What you can do </li></ul><ul><li>How to repair your credit </li></ul>
    3. 3. WHAT THE HECK IT CREDIT? <ul><li>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. </li></ul><ul><li>Helps predict how creditworthy you are; how likely it is that you will repay a loan and make the payments on time. </li></ul><ul><li>Generally, the lower the risk, the higher your score. </li></ul><ul><li>You can get your credit score from the three nationwide credit reporting companies, but you will have to pay for them: </li></ul><ul><ul><ul><ul><li>Equifax 1-800-685-1111 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Experian 1-888-397-3742 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>TransUnion 1-800-916-8800 </li></ul></ul></ul></ul>
    4. 4. What make the Credit “Score” according to The Federal Trade Commission
    5. 5. How Credit Effects You <ul><li>Many Employers are now checking your credit score </li></ul><ul><li>Bad scores can keep you from getting jobs </li></ul><ul><li>You may not be able to get loans </li></ul>
    6. 6. What changes “THE SCORE” <ul><li>Have you paid your bills on time? </li></ul><ul><li>Are you maxed out? </li></ul><ul><li>How long have you had credit? </li></ul><ul><li>Have you applied for new credit lately? </li></ul><ul><li>How many credit accounts do you have and what kinds of accounts are they? </li></ul>
    7. 7. To Maintain Your Credit <ul><ul><li>Be Stable - No more then 2 address for past 5 years; stay in one job </li></ul></ul><ul><ul><li>Maintain a Good Pay history - Accounts are current, paid on time, and/or paid in full as agreed. </li></ul></ul><ul><ul><li>Keep Your Debt to Income Low– Not maxed out on credit lines or credit cards </li></ul></ul><ul><ul><li>No Collection – No Judgments – No late payments </li></ul></ul><ul><ul><li>Keep Credit Inquiries Low– No more than 3 a year. </li></ul></ul>.
    8. 8. How to Start <ul><li>Start Small then work up: </li></ul><ul><ul><li>Savings Account – used as source of collateral </li></ul></ul><ul><ul><li>Checking Account – Show discipline with money </li></ul></ul><ul><ul><li>Shared/Passport Secured Loan (a borrower or co-signer secures the loan with funds from a share savings account. ) </li></ul></ul>
    9. 9. More… <ul><ul><li>Debit Card – Responsible use helps financial institutions decide to give you an actual credit card </li></ul></ul><ul><ul><li>Pre-paid credit cards </li></ul></ul><ul><ul><li>Credit Card/Department store cards </li></ul></ul><ul><ul><li>Signature Loans - loan not backed by collateral; personal loan </li></ul></ul><ul><ul><li>Secured Loans – tied to something you own </li></ul></ul>
    10. 10. Barriers That Come Up <ul><ul><li>Divorce/Separation </li></ul></ul><ul><ul><li>Death in the family </li></ul></ul><ul><ul><li>Loss of income </li></ul></ul><ul><ul><li>Illness </li></ul></ul><ul><ul><li>Surgery </li></ul></ul><ul><ul><li>Cut in wage/hours at work </li></ul></ul>
    11. 11. What Makes You Look Bad <ul><ul><li>No credit – This is when you have no type of credit. </li></ul></ul><ul><ul><li>To much credit – To many credit cards, loans, or lines of credit. With or without balances. Potential debt. </li></ul></ul><ul><ul><li>Having many jobs and/or addresses – Instability is shown when you move to often or have many different jobs. </li></ul></ul><ul><ul><li>No Savings – living beyond your means </li></ul></ul><ul><ul><li>Bad Pay History – payments are behind or have been behind. </li></ul></ul><ul><ul><li>Having Judgments Against You– bills that have been sent to attorneys for collection. </li></ul></ul>
    12. 12. Improving Your Score <ul><li>There is no quick fix. </li></ul><ul><li>It takes time and work to improve your score </li></ul><ul><li>With that: </li></ul><ul><ul><li>Get copies of your credit report (1 Free a Year) from </li></ul></ul><ul><ul><li>Send a letter to the credit agencies and creditors asking to fix inaccuracies, with proof of inaccuracy </li></ul></ul><ul><ul><li>If needed, contact you creditors to add accounts to your file ( for “insufficient credit file” or “no credit file.” </li></ul></ul>
    13. 13. What you can do continued… <ul><li>Your best bet always is to contact your creditor directly and as soon as you are having problems making payments. </li></ul><ul><li>Check with local programs for assistance </li></ul><ul><ul><li>Salvation Army </li></ul></ul><ul><ul><li>Western Arizona Council of Governments </li></ul></ul><ul><ul><li>Your church </li></ul></ul><ul><ul><li>YPIC </li></ul></ul><ul><ul><li>DES </li></ul></ul><ul><ul><li>JOBS </li></ul></ul><ul><ul><li>Money Management International </li></ul></ul>
    14. 14. More Steps You Can Take <ul><li>Create and stick to a budget </li></ul><ul><li>Take control of your spending or get help if you cannot </li></ul><ul><li>Change your spending first – cut cable, internet, subscriptions, and personal things (nails, hobbies, etc.) </li></ul><ul><li>Income – stop unnecessary withholdings, talk to tax advisor, take on odd or part-time job is possible. </li></ul><ul><li>Remember this is short-term! </li></ul><ul><li>Credit counseling from a reputable organization (Remember what to watch our for) </li></ul><ul><li>Debt consolidation </li></ul><ul><li>Bankruptcy (LAST RESORT!!!!!) </li></ul>
    15. 15. What to avoid <ul><ul><li>Companies or Programs That : </li></ul></ul><ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>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 </li></ul>
    16. 16. Continued… <ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul>
    17. 17. Sources <ul><li>Federal Trade Commission Money Matters </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>