It is hardly true that financial inclusion gaps forced countries around the world to explore the potential of digital financial services and fintech companies allow leapfrogging of traditional brick-and-mortar banking services. As per the study conducted by the World Bank, access to affordable financial services is critical for poverty reduction and economic growth. At the macro level, countries with deeper, more developed financial systems can allocate capital and risks more efficiently and consequently enjoy higher economic growth and larger reductions in poverty and income inequality. At the micro level, financial inclusions—access to and use of basic financial services—can reduce poverty, increase resilience and improve the lives of the poor. Digital financial services bridge the financial inclusion gaps and enhance economic growth. Fueled by the explosive growth of mobile phones, digital financial services (DFS) leverage technology to offer new forms of financial accounts that provide secure options for storing, transferring, and accumulating money. Hence, digital financial services are becoming accessible and affordable to all individuals and businesses through digital financial channels which ultimately boosts financial inclusion. The contribution of digital financial service in alleviating constraints to financial access is quite immense. The emergence of mobile money, platform eco systems and open application programming interfaces (APIs) uplifted the digital financial service at the global level and impacted the level of financial inclusion. Yet in many emerging economies today, the majority of individuals and small businesses lack access to even basic savings and credit products, which hinders economic growth and perpetuates poverty. Financial exclusion is at the forefront in the list of the challenges which inhibit the growth of many economies around the globe. Digital financial services enable financial institutions to provide convenient self-service saving and credit products. Traditional saving and lending processes are being replaced by quick and painless digital processes and helps to enhance digital customer centric experience. Looking the relevance of digital financial service to financial inclusion, the government of Ethiopia is undertaking digital transformation to boost the economy and the necessary regulations have been crafted to create conducive environment. As per the study conducted by national bank of Ethiopia, only 35% of the population is financially included and the remaining 65% of the population is excluded from financial service. Needless to mention, digital financial services would allow financial institutions to outreach financially excluded segments of the population. Increasing digital adoption, digital payment offerings, ease of regulation to attract new entrants, and a growing fintech community are the main drivers of digital transformation in Ethiopia. As part of easing regulations, the government of

1. Credit Management

2. 2
Agenda
Credit Management
 The Impact of Credit
 Building Credit
 Credit Scores and Credit Reports
 The Cost of Credit
 Recovering from Debt
 Resources

3. The Impact of Credit

4. 4
What’s the Best and Worst That Could Happen?
Credit Management
What are some:
 Wise uses of credit?
 Unwise uses of credit?

5. 5
Good Credit
Qualify mortgage/rental/loans
Purchase insurance
Qualify for jobs with security
clearance
Qualify for overseas
assignments
Poor Credit
Qualify mortgage/rental/loans
Purchase insurance
Qualify for jobs with security
clearance
Qualify for overseas
assignments
Wise and Unwise Uses of Credit
Credit Management
Effects of Good and Poor Credit

6. Building Credit

7. 7
Qualifying for Credit
Credit Management
 Character
 Capacity
 Collateral

8. 8
Establishing Credit
Credit Management
Share-Secured Loan
Co-signed Loan
Retail Cards
Major Credit Cards

9. Credit Scores and
Credit Reports

10. 10
Five Components of a Credit Score
Credit Management
35%
30%
15%
10%
10%
35%
30%
Credit Utilization
How much a person owes
relative to their credit limits
Length of Credit
History
15%
How long an account has been open
and how recently it has been utilized
New Credit
Whether there are new requests for
credit/credit inquiries on the account
10%
Payment History
Credit Mix
10%
Whether there is a mix of different types of
credit, such as a mortgage, a credit card and
an installment loan
Whether payments are made
on time

11. 11
Score Ranges
Credit Management
• 800–850: Exceptional
• 740–799: Very good
• 670–739: Good
• 580–669: Fair
• 300–579: Poor

12. 12
Credit Reports
Credit Management
 Credit Reporting Agencies
o Equifax
o Experian
o Transunion
 Credit Report Contents
o Employment History
o Payment History
o Inquiries
o Public Record Information

13. 13
Annual Review
Credit Management
 Free Annual Credit Report
www.annualcreditreport.com
 Fair Credit Reporting Act
(FCRA)
 Review Report for Errors

14. The Cost of Credit

15. 15
How Much Does Credit Cost?
Credit Management
 FINRED Loan Calculator
 Credit Terms
□ Annual Percentage Rate
(APR)
□ Variable Rate
□ Repayment Period
□ Grace Period
□ Average Daily Balance
□ Minimum Monthly Payment
□ CARD Act
 Credit Fees
□ Balance Transfer
□ Late / Delinquency
□ Cash Advance
□ Over-the-Limit
□ Annual
□ Foreign Transaction
 Loan Interest Calculations
□ Simple
□ Add-on

16. 16
Shopping for Credit
Credit Management
 Credit Unions
 Banks
 Savings and Loan
Associations
 Finance Companies
 Retail Merchants

17. 17
Predatory Lending Practices
Credit Management

18. 18
Five Ways to Reduce Cost of Credit
Credit Management
 Pay Bills on Time
 Get Preapproved
 Shop Around & Compare Costs
 Know the Terms
 Servicemembers Civil Relief Act (SCRA)
 Military Lending Act (MLA)

19. Recovering from Debt

20. 20
Credit Warning Signs
Credit Management
 Making only minimum payments
 Most income going to repay debt
 Falling behind on payments
 Credit used for living expenses
 At or near credit limits most of time (credit cards)

21. 21
Take Charge!
Credit Management
Change Behavior
Change
Prioritize Debts
Prioritize
Power Payment Plan
Power Pay
Seek Help
Talk to Creditors; Financial Counselors;
Installation Legal Service Office
Seek
Do Your Homework
Credit Repair Clinics / Repair Services; Debt
Settlement Companies; Bankruptcy
Do

22. Resources

23. 23
Websites
Credit Management
 Office of Personal Financial
Readiness
finred.usalearning.gov
 Consumer Financial
Protection Bureau (CFPB)
www.consumerfinance.gov
 MilSpouse Money Mission
www.milspousemoneymission.org

24. 24
Additional Support Resources
Credit Management
 Personal Financial Manager (PFM) and Personal Financial Counselor (PFC)
□ Degreed and nationally certified financial professionals
□ Provide no cost personal financial counseling
□ Offer financial education and training
 Locate a PFM at:
□ Military Installation locator
installations.militaryonesource.mil/
 Locate a PFC at:
□ PFC locator map
finred.usalearning.gov/pfcMap

25. Summary and Review

26. 26
Questions?
Credit Management
 The Impact of Credit
 Building Credit
 Credit Scores and Credit Reports
 The Cost of Credit
 Recovering from Debt
 Resources