The document covers essential aspects of credit management including the impact of credit, building credit, and understanding credit scores and reports. It discusses wise and unwise uses of credit, costs associated with credit, and strategies for recovering from debt. Additionally, it provides resources for personal financial management and emphasizes the importance of credit health.

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