Credit, Debt Credit Reports by yah17499

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									Credit, Debt & Credit Reports




         Presented by
The Need For Credit
• Advantages
  –   Access to a Larger Marketplace
  –   Safer than Carrying Cash
  –   Used as a Character Reference
• Disadvantages
  – Interest Paid on Purchases
  – Using for Emergencies vs. Establishing Savings
  – Temptation to Overspend
  – Used as a Character Reference
Kinds of Credit
• Secured Credit
 - Involves something to give in return for
 the credit provided (a house, a car, etc.)

• Unsecured Credit
 -The debt can only be paid with money

• Open Ended Credit
 - Has no limit on its usage (Revolving)

• Closed Ended Credit
 - Once the debt is paid, no more payments
 are required and the debt is over
 Shopping For Credit
• Annual Percentage Rate (APR)
  –   Fixed vs. Variable. Demand the lowest interest
• Calculating Finance Charges
  –   Average Daily Balance vs. Two-Cycle
• Fees, Penalties and Grace Periods
  –   Late Fees, Over the Limit Fees, Inactivity Fees
  –   Find out how long the grace period is
• Affinity Programs
  –   Points, Frequent Flyer Miles, VIP Tickets, Rewards, etc.
  –   Only good when you know how to use them
CREDIT USE PROFILE
       WHERE DO YOU FALL?




    Reserved
How To Maintain A Positive
Relationship With Your Creditors
• Pay Your Bills When They Arrive
• Pay More Than Your Minimum Payment
• Restrict Credit Card Use
• Don’t Miss Payments
Has this ever happened to you?
   How Much Is “Enough?”
                                      Savings
 Take control of                      10%
 your expenses
                                            Credit
• 10% for Savings   Living Expenses
                    70 % (Net)             20%
• 20% for Credit
• 70% for Living        Living
 Expenses              Expenses
 (Net Income)              70%
It Can Happen to Anyone!
   If It’s Already Too Much
• Debt Consolidation              - Legal
 and Financial Advice Necessary

• Debt Management               - With
 Help of a Credit Counselor. Variable
 Credit Impact.

• Debt Settlement           - Negotiate
 with Creditors to Reduce and Settle a
 Debt (Uncommon, But Can Happen)

• Bankruptcy         - Last Resource to Eliminate Debt, Stop
 Collections and Protect Assets. Severe Credit Impact. Years to
 Recover. Requires Careful Education before Making the Decision.
 Legal and Credit Advice a Must.
 You Can Reduce Your Debt
• Complete a Debt Profile
  –   Review your income and expenses
• Prioritize Accounts
  –   Most important to less important
• Reduce Credit Usage
  –   Use more cash and debit, less credit
• Negotiate Lower Interest Rates
  –   The worst thing that can happen is they say “no”
• Use a Self-Administered Debt Reduction Plan
• Consider Using Debt Management Service
  –   Review track record, credentials and FREE counseling
7 Collection Agency Pointers

1. Don’t Ignore the Phone Calls
2. Don’t Make Promises You Can’t Keep
3. Don’t Give Out Your Bank Information
4. Don’t Send Post-Dated Checks
5. Don’t Accept Abusive Collection Tactics
6. Negotiate Settlements/Notations
7. Complain to Consumer Affairs and FTC
 Identity Theft Prevention
• Use Credit Report Alerts
  –   Monitor reports at least twice a year
• Protect Your Information
• Use Complex Passwords/PINS
  –   Change them often. NO birthdays as PINs
• Never Give Information Over the Phone
  –   Look out for suspicious calls, mail and “prices”
• Report Lost/Stolen Credit Cards
• Limit Information Printed on Checks
Shop Before You Drop
  Credit Reports
• Ordering Your Credit Report
  – Order Reports Twice a Year
  – The only Official Source For a
    Free Credit Report Is:
      www.annualcreditreport.com
      or 1-877-322-8228
  –   Get your 3 Credit Reports:
      Equifax, Experian and TransUnion
• Reviewing Your Credit Report
  –   Correct / Dispute Inaccurate Information
• Cleaning Up Your Credit vs. Do-it-Yourself
Making Changes
• Check Information on Credit Reports
• Contact Your Creditors
   – Dispute Inaccurate Information
• Contact Credit Reporting Agencies
   – Dispute Inaccurate Information
• Negotiate Report Notations
• Look for Help
   – Free Credit Counseling
   – ID Theft Solutions from Reliable Sources
 Credit Scores
• What is a Credit Score?
  – Who is “FICO”?

• How are Credit Scores Used?
  – Landlords, Employers, Lenders, Service providers

• What Factors Make Up a FICO Credit Score?
  – 35% Payment History
  – 30% Amount Owed
  – 15% Length of Credit History
  – 10% Types of Credit
  – 10% New Credit
  7 Steps to a Better Credit
1. Pay Your Bills On Time
2. Reduce Your Debt
   •  Pay Small Balances and Big APRs First
3. Choose New Credit Wisely
   •  Limit Inquiries and New Accounts
4. Increase Your Assets/Savings
5. Monitor Your Credit Reports
   •  At least twice a year. Look for errors
6. Review Unused Accounts
    • Learn Pros and Cons of Closing Credit Lines & Cards
7. Talk to a Credit Counselor
    • Credit Counseling is FREE. Avoid Scams!
    Some Resources for Consumer Information
•   www.ClearPointCCS.org (Free Credit / Housing Counseling)
•   www.annualcreditreport.com (Credit Reports, Info & Alerts)
•   www.myfico.com (Credit Score –NOT FREE)
•   www.la.bbb.org (Business Rating, Consumer Defense)
•   www.hud.gov (Housing and Tenant Info)
•   www.dca.lacounty.gov (Dept of Consumer Affairs, ID Theft, Fraud)
•   www.ftc.gov (Federal Trade Commission, Frauds, Education)
•   www.fdic.gov (Consumer Information, service links, Education)
•   www.consumer-action.org (Consumer Defense Info)
•   www.stopthesqueeze.org (Credit-Oriented Information)
•   www.idtheft.gov (Consumer Information, Service links)
•   www.healthycity.org (Social Services Online Finder)
•   www.infoline-la.org (211, Social Services 24-hour phone info)
• Report scams and misleading advertising!
          Thank you for choosing




To meet your financial education requirements

       http://www.clearpointccs.org

             1.800.750.2227

								
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