Docstoc

Slide 1 - Washington State Department of Financial Institutions

Document Sample
Slide 1 - Washington State Department of Financial Institutions Powered By Docstoc
					Extra Credit
Understanding Credit & Debt
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Benjamin Franklin On Debt
“Creditors have better memories than debtors.”

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

What We’ll Talk About
  

Debt & How To Handle It Your Credit Score & How To Raise It Credit Reports & How To Obtain One




Credit In The Current Market
Talking To Your Students

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Not All Debt Is Evil


Credit is a valuable tool, yet many people misuse and overuse it.

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Warning Signs: Too Much Debt
Signs of someone who may be in trouble:
1)

Making only the minimum payment

2)

Maxing or nearly maxing out credit cards
Not knowing how much is owed

3)

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Warning Signs: Too Much Debt
Signs of someone who may be in trouble:
4)

Using credit cards to purchase items that used to be purchased with cash Paying off one card with another card Phone calls or letters from creditors
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

5)

6)

Lowering Your Debt


Ask Your Credit Card Company To Lower Your Interest Rate If Your Card Company Wont Lower – Shop For A Lower Rate Card Set up a tight budget and stick to it. Find ways to save money – America Saves Set realistic goals
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”







If You Are In Trouble
  

Stop Borrowing Contact Your Creditors Review the Fair Debt Collection Act Speak with a credit counselor



Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Where To Turn For Help


Credit Counselors


National Foundation for Credit Counseling www.debtadvice.org Debt Management Plans





Friends or Family


Ask to borrow money from a friend or family



No to low-interest loans
”Regulating financial services to protect and educate the public and promote economic vitality.”

Washington State Department of Financial Institutions

Protect Yourself


Be wary of organizations or individuals that:


Promise to solve your problem overnight



Charge high up front fees
Won’t disclose the costs for their services



If It Sounds Too Good To Be True … It Probably Is
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Credit Scores & Reports
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Do You Check Your Score?
Raise your hand if you have checked your credit score within the past two years?

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

How About Others?
Only

49% of Americans have obtained their credit score in the past two years.
(Consumer Federation of America, 2008)

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Credit Scores


What Is A Credit Score?


The score given to an individual to determine their credit worthiness. FICO and Vantage.



Who checks your credit score?
    

Credit card companies Lenders Insurance Companies Employers Phone companies
”Regulating financial services to protect and educate the public and promote economic vitality.”

Washington State Department of Financial Institutions

Credit Scores


How your score can affect you:


Interest Rates


If your rate goes up on 1 card it can go up on another




Insurance Rates
Some Employers Use It When Hiring

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

An Example


On a $225,000 home:


6% Interest Rate


30-year fixed = $1348/mo



5% Interest Rate
 

30-year fixed = $1207/mo. $141.14/mo. difference



$50,810 over 30 yrs

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

How Your Score Is Calculated


FICO® scores are calculated based on your rating in five general categories:
1) Payment History 2) Amounts Owed 3) Length Of Credit History 4) New Credit 5) Types Of Credit Used

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

What’s A Good Score?


FICO Scores Range From 300 – 850



In the eyes of most lenders, FICO credit scores above 700 (750) are very good.



Recent changes in the economy have changed what lenders as a very good score

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Your Credit Report


A credit report is a report containing a detailed credit history of an individual.


 What’s On Your Credit Report?


 

Personal Information (Name, SSN, Etc.) Public Records & Collection Accounts (Bankruptcies, Foreclosures, Etc.) Your Credit History & Current Obligations Credit Inquiries

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

How To Check Your Credit Report & Score


You are entitled to 1 free credit report a year from each of the 3 major credit bureaus.



To request your free credit report visit www.annualcreditreport.com You can also request your credit score. A small fee may apply.
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”



Improving Credit Scores


Pay Bills On Time (Get current, stay current) Pay Off Debt – Don’t Move It Around





Don’t Close Unused Credit Cards As A ShortTerm Strategy To Raise Your Score
Don’t Open New Credit You Don’t Need.



Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

More Tips For Improving Credit Scores


Repair Errors (Outstanding Debts You Paid) Pay Down Balances To 20-30% Of Credit





If You Have 1 Or 2 Old Cards You Haven't Used Put A Little On The Card And Then Pay It Off
Do This About 1 Every 6 Months



Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Credit In The Current Market


Lenders are lowering credit limits
 

20% banks lower on prime borrowers 60% banks lower on subprime borrowers



Lenders are tightening their requirements.


Good Score - 750 or higher



Lenders are closing inactive cards


Less liability

Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Talking With Students
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

Talking With Your Students
 Fill


them in on the following:







They should charge only what they can afford to pay back. Credit cards shouldn't be a money substitute for items they can't afford. They need to pay their bills on time and not just the minimum amount. Credit companies specifically target college students.
”Regulating financial services to protect and educate the public and promote economic vitality.”

Washington State Department of Financial Institutions

Resources For Your Students


DFI’s Right on the Money – Financial Know-How For College Students


www.dfi.wa.gov/consumers/collegebookorder.htm

 

FTC Credit Web Site


www.ftc.gov/credit

AICPA


www.360financialliteracy.org/Life+Stages/ College/ www.controlyourcredit.gov/



Bad Credit Hotel


Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”

DFI: We’re here for you!
 Contact Us:  www.dfi.wa.gov / 1.877.RING.DFI  Lyn Peters Director of Communications lpeters@dfi.wa.gov 360.902.8731  Jeremy Lushene Web Master-Communications Consultant jlushene@dfi.wa.gov 360.902.0506
Washington State Department of Financial Institutions
”Regulating financial services to protect and educate the public and promote economic vitality.”


				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:4
posted:11/6/2009
language:English
pages:27