Managing Debt and Your Credit Score by fanzhongqing

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									 MANAGING YOUR DEBT
AND YOUR CREDIT SCORE
        REDUCE YOUR DEBT

Step 1: List your outstanding debts

Step 2: Prioritize which debts to pay first

Step 3: Negotiate with creditors

Step 4: Get help if you need it!!

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LIST YOUR OUTSTANDING DEBT
Creditor                                 Balance Due   Interest   Current Monthly
(list by interest rate from highest to                 rate       Payment
lowest)
1.


2.


3.


4.


Total debt and monthly payments



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 PRIORITIZE WHICH DEBTS TO
          PAY FIRST
Remember that you need the pay at least the
 minimum monthly payment set by the creditor

If you can, pay more each month on the
 accounts with the highest interest rates;
 advantage – saving money interest payments

An alternative is to pay more each month to
 clear the smallest outstanding balances first;
 advantage – you may perceive faster progress

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WAYS TO GET HELP WITH YOUR
           DEBT
Negotiate direct with your creditors

Find a trained, certified counselor, free of charge
 or at low cost, through the National Foundation
 for Credit Counseling: http://www.nfcc.org/ or
 http://www.debtadvice.org/

If at risk for foreclosure, contact Hope Now on
 their 24 free hotline 1-888-995-HOPE (4673) or
 website http://www.hopenow.com/

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 CREDIT REPORTING AND YOUR
         FICO SCORE
 Credit reports are obtained from the 3 nationwide credit
  reporting companies: Equifax, Experian and
  TransUnion

 A credit report provides information on your borrowing
  activity

 A credit score, also known as FICO® score, is based on
  the information in your credit report

 Creditors use credit scoring to determine whether to give
  you credit, and to set an interest rate


   THE INFORMATION IN YOUR
        CREDIT REPORT
Personal Information: Your name, address, SSN,
  date of birth and employment information
Accounts: type of account (bankcard, auto loan,
  mortgage, etc.), the date you opened the account, your
  credit limit or loan amount, the account balance and your
  payment history
Inquiries: a list of lenders who accessed your credit
  report within the last two years
Negative Items: delinquency information such as
  overdue debt, bankruptcy, tax liens

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         ABOUT FICO SCORES

They range from 300-850, higher is better
The median FICO® score in the U.S. is 723
The FICO score considers:
  –   Payment history - 35%
  –   Amounts owed - 30%
  –   Length of credit history - 15%
  –   New credit - 10%
  –   Types of credit used - 10%


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   WHY IS MY FICO SCORE SO
        IMPORTANT?

The higher your credit score, the better
 your chance of qualifying for credit

The higher your credit score, the lower
 your loan payments!



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  EXAMPLE OF EFFECT OF FICO
   SCORE ON LOAN PAYMENTS
Payments on a 36 month auto loan of $25,000

FICO® score        APR        Monthly payment
720-850            6.196%          $763
690-719            7.700%          $780
660-689            8.824%          $793
620-659           11.187%          $821
590-619           14.597%          $862
500-589           15.442%          $872

Source: myfico.com September 18, 2008

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 WHEN SHOULD I CHECK MY
CREDIT REPORT & FICO SCORE?

Check your credit report at least once per
 year

Check your credit report & FICO score at
 least 6 months prior to applying for a big
 loan, to give you time to improve your
 FICO score if needed

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  HOW DO I OBTAIN MY CREDIT
    REPORT & FICO SCORE?
 You are entitled to a free credit report once every 12 months from
  each of Equifax, Experian and TransUnion

 AnnualCreditReport.com is the official, centralized service for a
  free credit report (online, by phone or by mail) and your FICO score
  (for which you may pay a small fee)

 Direct from the credit reporting agencies:

   ■ Equifax: 800) 685-1111, www.equifax.com
   ■ Experian (formerly TRW): (888) 397-3742, www.experian.com
   ■ TransUnion: (800) 888-4213, www.transunion.com

 www.myfico.com - a fee is charged


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     DISPUTING ERRORS ON THE
          CREDIT REPORT
 Contacting the credit reporting agencies directly:

   ■ Equifax: 800) 685-1111, www.equifax.com

   ■ Experian (formerly TRW): (888) 397-3742, www.experian.com

   ■ TransUnion: (800) 888-4213, www.transunion.com

OR

 Contact the entity/creditor for which debt is reported; contact details
  for creditors are stated on the credit report



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  WHERE CAN I FIND FURTHER
  INFORMATION AND ADVICE?
                       miFICO.com
 Understanding your credit report and credit score

 Fixing errors in your credit report

 Tips on improving your FICO score

 Identity theft; advice on prevention, detection, and action
  to take if it happens to you

 Credit calculators

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