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					Rebuilding Good Credit


       Money Wi$e
        – A joint financial education project
          of Consumer Action and Capital
          One Services, Inc.




MoneyWi$e: Rebuilding Good Credit
By the end of the training you
will understand:
       – How poor credit can prevent you
         from doing certain things.
       – That it is never too late to start to
         rebuild good credit.
       – What information on a credit report
         is seen as negative.
       – Some ways to improve one’s credit.




MoneyWi$e: Rebuilding Good Credit
About the Rebuilding Good
Credit training
       There will be two sessions of two
        hours each.
       Each two-hour session will
        include a 15-minute break.




MoneyWi$e: Rebuilding Good Credit
In participants’ folders

          <   ‘Improve Your Credit’ (brochure)
          <   Evaluating Financial Services Ads
              (classroom activity)
          <   Setting Reasonable Debt Payments
              Worksheet (take-home)
          <   Are You Damaging Your Credit
              questionnaire (take-home)
          <   Compare Three Secured Credit Card
              Offers (classroom activity)
          <   Evaluation of the MoneyWi$e
              Rebuilding Good Credit Seminar


MoneyWi$e: Rebuilding Good Credit
Rebuilding Good Credit


       Session one (two hours)




MoneyWi$e: Rebuilding Good Credit
Welcome

       Let’s introduce ourselves.
       What do you hope to get out of
        this training?




MoneyWi$e: Rebuilding Good Credit
‘Improve Your Credit’
A MoneyWi$e brochure
       Look in your folder for the
        brochure titled ‘Improve Your
        Credit.’
        Take a couple minutes to review
        the brochure.




MoneyWi$e: Rebuilding Good Credit
Damaged credit

       What does bad credit mean to
        you?




MoneyWi$e: Rebuilding Good Credit
How can bad credit limit your
life?
       Access to credit is essential for
        buying a home or financing a
        car.




MoneyWi$e: Rebuilding Good Credit
Poor credit may hinder your
ability to:
       get a credit card.
       rent an apartment.
       start phone service.
       buy life insurance.
       get a job.




MoneyWi$e: Rebuilding Good Credit
How do you know if you have
bad credit?
       – Many people first realize they have
         credit problems when they are
         turned down for a loan, a job or a
         rental dwelling.




MoneyWi$e: Rebuilding Good Credit
Credit reports &
credit bureaus




MoneyWi$e: Rebuilding Good Credit
How do companies know if
you have bad credit?
       Information about your credit is
        kept by credit reporting bureaus.

       This information on file about
        you is called a credit report.




MoneyWi$e: Rebuilding Good Credit
It’s your right to see a copy of
your credit report
       You can get a free copy of your
        credit reports from the 3 major
        reporting bureaus each year.
       www.annualcreditreport.com
       It is also free if you’ve been
        turned down for credit.
       If not, there is a charge of about
        $9 per copy.


MoneyWi$e: Rebuilding Good Credit
What is a credit report?

       A record of your past and
        present loans and credit
        accounts.




MoneyWi$e: Rebuilding Good Credit
What’s in your credit report?

       Information about your past and
        current...
        – credit cards
        – mortgages
        – car loans.
           <   Your credit report has information
               about credit accounts you’ve had in the
               past seven years (or the past 10 years if
               you filed for bankruptcy).


MoneyWi$e: Rebuilding Good Credit
Remember

       If you have been denied credit in
        the past 60 days, you can get a
        free copy of your credit report.
       You have the right to correct
        errors in your credit report.
       You can’t remove accurate
        information in your credit report.


MoneyWi$e: Rebuilding Good Credit
Credit reporting bureaus

       There are three major credit
        reporting bureaus:
        – Equifax
        – Experian
        – TransUnion
           <   The contact information for the credit
               bureaus is in your ‘Improve Your Credit’
               brochure.




MoneyWi$e: Rebuilding Good Credit
Take a break


       Please come back in 15 minutes




MoneyWi$e: Rebuilding Good Credit
Credit repair offers &
debt consolidation




MoneyWi$e: Rebuilding Good Credit
Do credit repair companies
help fix bad credit?
       Everything a credit repair
        company can do legally, you can
        do yourself
           <   Credit repair companies charge
               money—sometimes lots of money
           <   No one can legally remove accurate
               negative information from a credit
               report.
           <   If you decide to work with a company,
               research its offer carefully.


MoneyWi$e: Rebuilding Good Credit
Can you get a new, clean
personal identity number?
       No. Companies that promise you
        a new Social Security or tax ID
        number are breaking the law.
           <   They tell you that you can apply for a
               special business tax identification
               number called an Employer
               Identification Number.
           <   Employer Identification Numbers are
               similar to Social Security Numbers,
               except they’re for businesses.


MoneyWi$e: Rebuilding Good Credit
Remember


       It’s a federal crime to make any
        false statements on a loan or
        credit application.




MoneyWi$e: Rebuilding Good Credit
Loan consolidation

       Can you consolidate all your
        loans together under a new
        loan?
        – Debt consolidation loans could put
          you deeper into debt.
       Borrowing money from relatives
        or friends can be a great way to
        consolidate your debts.

MoneyWi$e: Rebuilding Good Credit
A home equity loan might be a
solution.
       If you are a homeowner and have
        equity in your home, you can
        take out a home equity loan.
        – The interest may be tax deductible.
       Approach any loan secured by
        your home with caution.
        – If you fail to repay the loan, you
          could lose your home.


MoneyWi$e: Rebuilding Good Credit
Let’s evaluate some ads

       Class activity
        – Take out the activity sheet from
          your folders.
        – Read the ads carefully.
           <   Do you believe they offer a legitimate
               service?
        – Jot down your reasons to share
          with the class.



MoneyWi$e: Rebuilding Good Credit
Evaluating ads for financial
services
       Legitimate lenders never
        ‘guarantee’ that you can get a
        loan or a credit card.
       It’s against the law to ask you to
        pay for a loan before you are
        approved.
       Any promise to create a new
        identity is a scam.

MoneyWi$e: Rebuilding Good Credit
Remember


       Legitimate ads do not make
        outrageous, unbelievable claims.
        – Web sites that end in “.org” (DOT
          ORG) are owned by not-for-profit
          organizations.




MoneyWi$e: Rebuilding Good Credit
Remember


       ‘900’ numbers are a red flag for
        fraud
        – When you call a ‘900’ number you
          will be charged a lot of money on
          your phone bill.




MoneyWi$e: Rebuilding Good Credit
Collection agencies


       If you don’t pay a debt, the
        company you owe money to
        might hire a collection agency.
        – Collection agencies get a cut of the
          debts they collect.




MoneyWi$e: Rebuilding Good Credit
What should you do if a
collection agency calls?
       Respond immediately if you
        don’t agree that you owe money.
       Ask the collection agency to
        prove that you owe the money.
        – A collection agency can’t try to
          collect the debt while its validity is
          being checked out.



MoneyWi$e: Rebuilding Good Credit
Collection agencies must
provide you with:
       The amount of the debt.
       The name of the original creditor.
       Notification that you have 30
        days to dispute the debt.




MoneyWi$e: Rebuilding Good Credit
Stop hassling me!

       Legally, you can ask a collection
        agency to back off.
       Put it in writing.
        – You are still responsible for paying
          legitimate debts.
        – You may be losing an opportunity
          to explain your situation and
          resolve the debt.


MoneyWi$e: Rebuilding Good Credit
Can collection agencies call
your neighbors?
       – Collectors may contact any third
         party (such as your neighbor,
         relative or co-worker) only one time.
       – They can only call to confirm or
         correct information about where
         you are.
       – They can’t tell the third party that
         you owe a debt.



MoneyWi$e: Rebuilding Good Credit
Let’s wrap-up the first session

       Please read the ‘Improve Your
        Credit’ brochure before the next
        session.
        – Next time we will go over secured
          credit cards, credit counseling,
          bankruptcy and how you can keep
          your credit in good shape.




MoneyWi$e: Rebuilding Good Credit
Here’s a helpful worksheet

       You’ll find a worksheet titled
        ‘Setting Reasonable Debt
        Payments’ in your folders.
       It’s for you to take home and fill
        out in private.
        – Attached to it you’ll find a
          questionnaire to help you assess
          your risk of damaged credit.


MoneyWi$e: Rebuilding Good Credit
Thank you ...

       for taking part in the MoneyWi$e
        Rebuilding Good Credit training

        – MoneyWi$e
           <   A joint financial education project of
               Consumer Action and Capital One.




MoneyWi$e: Rebuilding Good Credit
Rebuilding Good Credit


       Session Two (two hours)




MoneyWi$e: Rebuilding Good Credit
Welcome


       It’s great to see you again.
        – Have you had any thoughts about
          the first session that you’d like to
          share?




MoneyWi$e: Rebuilding Good Credit
Rebuilding Good Credit


       It’s never too late to start getting
        your credit back on track.




MoneyWi$e: Rebuilding Good Credit
How long will it take to rebuild
good credit?
       It takes time and patience to
        establish good credit.
       Each person’s situation is
        different and lenders have wide-
        ranging requirements.




MoneyWi$e: Rebuilding Good Credit
How much damage has been
done to your credit?
       A few late payments might be
        downplayed if you pay on time
        for several months.
       A default or bankruptcy may be
        more difficult to put behind you.




MoneyWi$e: Rebuilding Good Credit
Why should I even try?

       Access to credit is essential for:
           <   Buying a home.
           <   Financing a car.
       Poor credit may hinder your
        ability to:
           <   Get a credit card.
           <   Rent an apartment.
           <   Start phone service.
           <   Buy life insurance.
           <   Get a new job.

MoneyWi$e: Rebuilding Good Credit
What are some ways to
rebuild good credit?
       Pay your existing credit
        accounts on time.
       Apply for a credit card or small
        loan from:
        – Your bank.
        – Your credit union.
        – A local department store.



MoneyWi$e: Rebuilding Good Credit
Find a co-signer

       Ask a relative or friend with good
        credit to co-sign your credit
        application.
        – After a year of good payments, you
          should receive credit card offers on
          your own.
        – Make sure to close the co-signed
          account to absolve the co-signer of
          responsibility.

MoneyWi$e: Rebuilding Good Credit
Get a secured credit card

       – Secured credit cards are backed by
         money you deposit and keep in a
         bank account.
       – If you don’t pay off your credit card
         bill, the money in your account will
         be used to cover that debt.
       – Even people with poor credit may
         be able to get a secured Visa or
         MasterCard.


MoneyWi$e: Rebuilding Good Credit
Secured credit cards can help
you repair your credit.
       Make sure the credit card
        company will report your
        payments to credit bureaus.




MoneyWi$e: Rebuilding Good Credit
How you use your secured
credit card is important.
       Show that you can handle credit
        responsibly by using your card
        to make a few purchases.
       Make all payments before the
        due date and pay your balance in
        full each month.
       After one year, apply for a
        regular, unsecured card.

MoneyWi$e: Rebuilding Good Credit
Credit limits on secured cards

       The maximum amount you can
        charge is usually equal to the
        amount of your deposit.
        – Look for a card that will pay interest
          on your deposit.




MoneyWi$e: Rebuilding Good Credit
Secured card fees

       What’s reasonable?
       Secured cards always have
        annual fees.
       Avoid high up-front fees.




MoneyWi$e: Rebuilding Good Credit
Comparing secured credit
card offers
       Class activity

       Here are three secured credit
        card offers.
        – Decide which one seems like the
          best deal.




MoneyWi$e: Rebuilding Good Credit
Let’s talk about your
conclusions
       Did your responses jibe with the
        conclusions on the back?




MoneyWi$e: Rebuilding Good Credit
Let’s take a break


       Please come back in 15 minutes.




MoneyWi$e: Rebuilding Good Credit
Credit counseling, bankruptcy




MoneyWi$e: Rebuilding Good Credit
Credit counseling

       Credit counseling is a service
        that helps people get out of debt.
       Services offered
        – Budgeting & money management
        – Debt management programs




MoneyWi$e: Rebuilding Good Credit
Most credit counseling
organizations …
       negotiate directly with creditors
        on your behalf in order to lower
        interest rates and waive
        accumulated late fees.

       Find a credit counseling agency
        near you by calling 800-388-2227.


MoneyWi$e: Rebuilding Good Credit
Bankruptcy

       Before you consider filing
        bankruptcy:
        – Try to work out payment programs
          with your creditors or;
        – Enter a debt management
          counseling program.




MoneyWi$e: Rebuilding Good Credit
Two types of bankruptcy

       Chapter 7 (straight or liquidation
        bankruptcy)
       Chapter 13 (wage earner or
        repayment plan)




MoneyWi$e: Rebuilding Good Credit
Bankruptcy

       Remains on your credit report
        for 10 years.




MoneyWi$e: Rebuilding Good Credit
Sometimes bankruptcy cannot
be avoided
       Common reasons that people
        declare bankruptcy
        – Large medical bills.
        – Seriously over-extended credit.
        – Lack of adequate insurance after a
          catastrophe.
        – Divorce and marital problems.



MoneyWi$e: Rebuilding Good Credit
You need an attorney to file
bankruptcy.

       Before selecting a bankruptcy
        attorney, educate yourself about
        bankruptcy.




MoneyWi$e: Rebuilding Good Credit
Keeping your good credit

       Review your credit report at least
        once a year.
       Potentially negative information
        on your credit report includes:
        – Late payments on credit cards and
          loans.
        – Unpaid debts.
        – Bankruptcy.


MoneyWi$e: Rebuilding Good Credit
Credit fraud is on the rise

       Check your credit report
        carefully to ensure that:
        – All the debts listed belong to you.
        – A criminal hasn’t set up credit
          accounts under your name.
       If you find unauthorized or
        fraudulent activity, notify the
        credit bureaus right away.

MoneyWi$e: Rebuilding Good Credit
Good credit is about:

       Meeting your responsibilities.

       Not taking on more than you can
        handle.




MoneyWi$e: Rebuilding Good Credit
How you can protect your
credit
       Order copies of your credit
        report once a year to check for
        errors.
       Pay your bills on time.
       Apply only for credit that you
        really need.



MoneyWi$e: Rebuilding Good Credit
Close unneeded accounts

       You may be able to improve your
        credit standing by closing
        accounts that you no longer use.
       If you divorce or separate, make
        sure that joint accounts are
        closed.




MoneyWi$e: Rebuilding Good Credit
Questions and Answers


       Let’s open the floor to questions.




MoneyWi$e: Rebuilding Good Credit
Wrap-up and evaluation

       Let’s talk about how this course
        compared with your
        expectations.




MoneyWi$e: Rebuilding Good Credit
Congratulations!

       You’ve completed the
        MoneyWi$e Rebuilding Good
        Credit training.

       Good luck!




MoneyWi$e: Rebuilding Good Credit

				
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