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$ Featuring…


									                     Episode Briefs
                 A Companion Guide to the
                     Hit Online Show -

              Who Wants to Be…

          Financially Responsible?

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$?            Featuring…
 Credit Cards Debt Management Cash Management
Net Worth & Budgeting Investing Identity Theft The FICO Credit Score
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     Who Wants to be
  Financially Responsible?
 is a fun, interactive online financial literacy course to help
  young adults become more comfortable and confident in
   managing financial matters. Resembling a 1970’s game
show, the course features seven episodes in which real-life
     college students gain valuable financial advice on –
       Credit Cards                           Investing
       Debt Management                        Identity Theft
       Cash Management                        The FICO Credit Score
       New Worth & Budgeting

   Play the game, Who Wants to be Financially Responsible?, by
   going to You can watch all of the episodes in order, or
   select only those of interest to you. This booklet outlines the topics
   covered by each episode and explains some in greater detail. Use it as
   a companion guide or classroom reference. The online “cram sessions”
   for each episode provide even more useful information.

   LOL at the goofy antics and corny jokes! But remember that money
   management is serious business, no matter your stage of life.
   Who Wants to be Financially Responsible? offers you important,
   life-long lessons. Get started now at!
      Episode #1
                           Credit Cards
 Credit Card Development
 Obtaining a Credit Card
 Revolving Credit          Credit Card
 Monthly Interest Rate     Credit card companies charge
 Secured Credit Card       card holders a monthly interest   APR
                           fee based on the unpaid           Each credit card company
 Establishing a Credit     balance. When issued, credit      establishes its own interest
  History                  cards carry an established        rate which is known as an
                           borrowing limit. Each time
 Pre-approved Credit                                         APR, or Annual Percentage
  Cards                    you charge something to your      Rate. This represents the
                           account, the amount of your       annual rate of interest charged
 Annual Fees               line of credit decreases. But     to an existing card balance.
                           when you make payment             Cash advances against your
 Other Fees
                           toward your credit card debt,     credits card usually have a
 Cash Advances             you replenish the amount of       higher APR. If you pay off
                           available credit.                 the full balance owed each
 Special Services and
                                                             month, you will usually not be
                           Obtaining a                       charged interest. Credit card
 Impulsive Spending        Credit Card                       companies will charge their
                           Should you receive a letter       established rate of interest on
 Statement and Billing     from a credit card issuer that    unpaid card balances that are
  Cycle                    says you are “pre-approved”       carried from month to month.
 Zero Interest or Low      for a card, it usually means      Pay off your entire balance
  Interest Rate Offers     they want your business, but      each month to avoid large
                           you will be required to go        interest fees.
 Terms and Conditions      through the normal application
                           process. Be aware that credit     Minimum Payments
 Annual Percentage
  Rates (APR)              card companies charge a           Minimum payments are the
                           variety of fees, among them       smallest amounts that card
 Minimum Payments          annual fees and late payment      companies allow you to pay
                           fees. Before signing a credit     each month. However, if you
 Credit Card Deals
                           card agreement, be sure you       pay only the minimum each
 Debit Cards               understand all contract terms.    month, you’ll make little or
                           Credit card issuers may offer     no headway in paying off your
 Lost or Stolen Cards
                           cards to college students who     balance, and you’ll continue
 Negotiating Lower         are unemployed or have no         paying interest on your
  Rates or Fee Changes     credit history.                   original purchases which,

 Closing or Cancelling a
  Credit Card

                                           Who Wants to Be Financially Responsible?            2
                                                          $                             $
in the long run, greatly increases   Additionally, be aware of the
the price you originally paid for    terms “zero” or “very low”
the charged items. Try, always,      interest rates. Always read the
to pay your card balance off         offer’s terms and conditions
each month. If you encounter         carefully. You can always compare
a problem paying the entire          credit card offers and rates online
balance, then be sure you pay        at
at least twice the required
minimum amount.                      Don’t be afraid to negotiate with
                                     a card issuer for a lower interest
Debit Cards                          rate even after your account
An alternative to a credit card is   has been opened. If your card
a debit card. Debit cards allow      is lost or stolen, you need to
you to withdraw funds from your      immediately notify the credit card
bank checking or savings account.    company. It is important to keep
Each time you use it, you draw       in mind that closing an account is
down funds from your personal        usually not a good idea, because
account. There can be fees           doing so reduces your available
attached to a debit card depending   credit limit which can result in
on the bank or institution that      driving up your debt ratio and
holds your account.                  driving down your credit score.

Be Aware
It is imperative that you
understand the billing cycle
method your credit card
company uses. Missing just
one payment can lower your
credit score significantly.

                                                           Who Wants to Be Financially Responsible?   3
        Episode #2
                              Cash Management
u Cash Reserve or
    Emergency Fund            Highlights
u   Risk Tolerance            Cash Reserve or                    Liquidity
u   Personal Financial Plan   Emergency Fund                     Liquidity refers to your ability
                              Cash management is an              to convert your assets into
u   Liquidity                 important component of your        cash quickly, easily and
u   Opportunity Cost          personal financial plan. It        without loss of principal and
                              involves setting aside a “cash     free of withdrawal penalties
u   Principal Investment      reserve” – most commonly           and/or capital losses resulting
                              referred to as an “emergency       from market fluctuations.
u   Financial Goals
                              fund” – that will help you in
u   Unexpected or             the event of job loss or an        Opportunity Cost
    Unforeseen Expenses       unforeseen surge in expenses.      There is, of course, a hidden
                                                                 expense when you hold
u Own Financial Situation     Risk Tolerance                     your assets in cash. This
u Cash Management             Risk and cash management           expense is frequently termed
    Strategy                  go hand-in-hand. If you are        an “opportunity cost” which
                              young, just out of college and     represents the interest and/
u Building up an              have no dependents, you’ll         or capital gains you forego
    Emergency Fund
                              present higher risk tolerance      because you’ve held your
u   Cash Flow                 than a family provider with        assets in cash rather than
                              a mortgage and children in         investing in an interest-bearing
u   Fixed Expenses            college. Regardless of such risk   account, a capital-gain-
u   Variable Expenses         tolerance, you should regard       generating product or the like.
                              cash management as one of
u   Automatic Transactions    the most important aspects         Cash Management
u   Appropriate               of a successful personal           Strategy
    Investment Choices        financial plan.                    Cash management is not about
                                                                 setting aside a sum of money
u Credit Card Cash                                               toward a specific goal such as
    Advances                                                     replacing your car in five years.
                                                                 The “new car fund” is already
                                                                 earmarked for a particular
                                                                 purpose and should not be

considered part of your emergency     Once you’ve reached your              Automatic Transactions
fund. Your emergency fund is          emergency fund goal, it will          To be able to regularly put money
for unforeseen or unexpected          not require further funding.          into your emergency fund, your
expenses. You might note that                                               expenses should consistently be
financial planners suggest you try    Cash Flow                             less than your income. When that’s
to maintain the equivalent of three   Your “cash flow” refers to all        been achieved, you should put
to six months of income in your       money that flows in and out of        all or a portion of your positive
emergency fund. Clearly, your         your life on a monthly basis.         cash flow into your emergency
cash management objectives differ     Your income represents your           fund. Or, you can budget for your
from saving toward financial goals.   “cash inflow,” and your expenses      emergency fund as if it were any
                                      represent your “cash outflow.”        other fixed expense. An ideal
Building up an                        If you have no income, but you        way to do this is to have your
Emergency Fund                        still have expenses, you have a       bank automatically deduct a
After you’ve determined how           negative cash flow. If you have       fixed amount of money from your
much “security” cash you              income, but spend less than           regular account and transfer it into
require, focus on how to fortify      what you earn, your cash flow is      a special emergency fund account
your emergency fund. Financial        positive.                             that you set up.
planners recommend budgeting
just as you would budget for any      Fixed and Variable                    Appropriate
ongoing, fixed expense. To begin      Expenses                              Investment Choices
creating your emergency fund, you     Some expenses, such as rent,          Once you establish your emergency
must first determine four things:     are “fixed,” while other expenses,    fund account, be sure it goes to work
• how much money you want in          such as groceries, are considered     for you! Consider investing a portion
  your fund                           “variable.” Fixed expenses are        of the fund in interest-bearing
• how you will fund your reserve      easier to budget for since they       products such as savings accounts,
• how much you already have in        don’t vary from month to month.       certificates of deposit (CDs), money
  your fund                           However, most expenses tend to        market deposit accounts or money
• the date by which you intend        be variable and it is important,      market mutual funds. A detailed
  to have your reserve fully          for the purpose of budgeting,         description of each of these accounts
  funded.                             to anticipate what those              can be found online in the Cram
                                      expenses will be. The purpose         Session for Cash Management.
                                      of maintaining a budget and
                                      controlling cash flow is to enable    Credit Card
                                      you to realize a positive cash flow   Cash Advances
                                      at the end of each month.             Although credit card cash advances
                                                                            might look like a sensible fall-back
                                                                            option for emergency funds, they
                                                                            are not considered a wise choice
                                                                            because of the high rate of interest
                                                                            you would have to pay for such
                                                                            an advance.

                                                            Who Wants to Be Financially Responsible?                5
      Episode #3
                            Debt Management
 Good and Bad Debt
 Making Major Purchases
 Common Sense               Good and Bad Debt                   Making Major
                            One of the most effective ways      Purchases
 Debt-to-Income Ratio       to reign in credit overspending     Most often, a purchase
 Debt Reduction             is to use cash, whenever            decision comes down to
                            possible, to make purchases.        the question of whether we
 Snowball Method            However, debt in itself is not      can afford the item(s) we
 Transferring Credit Card   a bad thing. Most people will       want. Before making a major
  Balances                  need to borrow to purchase          purchase, don’t hesitate to
                            major items like a car or           get advice from someone
 Vehicles – Buy or Lease?   house. It’s always important        you trust. Take the time to
                            to determine whether or not         think about the item’s future
u	 Loans
                            the reason for borrowing will       value to you. Always be sure
 Credit Scores              add value to your life. A college   you’re getting the lowest price
                            education, for example, is good     possible relative to the quality
                            reason to borrow because,           of the product. A good gauge
 Refinancing                in the final analysis, that         of whether you can afford a
                            investment will usually yield       purchase using credit is to
 Home Equity Line of
                            positive return in the form of a    calculate your debt-to income
  Credit                    higher paying job. The college      ratio. Detailed instructions on
 Bankruptcy                 education, then, falls into         how to do that calculation can
                            the category of “good debt.”        be found online in the Cram
                            Financing items which are           Session for Debt Management.
                            consumed in the moment and
                            have no future return could fall    Debt Reduction
                            into the “bad debt” category.       In trying to determine the
                                                                quickest way to pay down
                                                                your debt, consider these
                                                                • Pay off, first, those debts
                                                                  that charge the highest rate
                                                                  of interest.
                                                                • Consolidate your debt under
                                                                  a single loan such as a
                                                                  home equity line of credit,

                                             Who Wants to Be Financially Responsible?              6
                                                                           it makes good sense to try to
                                                                           refinance	when	market	interest	
                                                                           rates fall one or more percent
                                                                           below the rate established for
                                                                           your original mortgage. If you fail
                                                                           to keep your monthly mortgage
   and pay off the loan over a       Vehicles – Buy or Lease?              payments current, your lender
   period of time.                   When buying or leasing a vehicle,     can foreclose on your loan and
•	 Use the “snowball method” –       there are many factors to consider.   sell the title to your home in order
   start by paying off your          First, decide on a vehicle you        to recoup part or all of the unpaid
   smallest	debts	first	while	       can truly afford. A car or truck      balance on your mortgage.
   continuing to make payments       loan should not go beyond
   on the larger ones (it is         three years, and you should be        Home Equity Line of Credit

   important to always keep ALL      prepared to make a minimum            A home equity line of credit
   account payments current).        down payment of at least 25           establishes an amount of
   Then concentrate on paying        percent. If you decide to lease       borrowable money based on

   down your larger debts. Keep      instead of purchasing, be sure you    the equity you may have in
   in	mind	that	you	need	to	fit	     completely understand all terms of    your home. The line of credit
   those payments into your          the lease before you sign.            allows you to borrow money for

   budget plan.                                                            specific	purposes	such	as	home	
                                     Credit Scores                         improvements, up to the amount
Transferring Credit Card             Three major credit reporting          specified	in	your	line	of	credit.	
Balances                             agencies maintain records of your     The money you borrow from your
You may be tempted to transfer       credit history. These records are     line of credit must be paid back,
credit card balances from one        used to rate your “risk factor” to    with interest, within the period
credit card account to another       lenders. Keeping your credit score    of time described in the terms of
offering a lower interest rate,      above 750 is a good goal. The         your line of credit agreement.
but in doing so, you must be very    most effective way to maintain a
careful! There are always charges    high credit score is to never miss    Bankruptcy
attached to a transfer transaction   a loan or credit card payment. Do     When a person’s debt exceeds
that could end up costing more       not max out your credit card line     his or her assets, bankruptcy
than what you’d gain by making       of credit, and don’t open multiple    becomes a last resort option.
the transfer. That would be          card accounts at one time. That       Bankruptcy, however, does not
determined by the dollar amount      will hurt your credit score.          always wipe out all debt and
of the transfer. Ask your bank or                                          involves a lengthy legal process.
credit card company for advice       Mortgages and                         A record of bankruptcy will
on this one.                         Refinancing                           remain on your credit report for
                                     Mortgages are loans made by a         a minimum of seven years and
                                     financial	institution	to	borrowers	   may greatly hinder your ability to
                                     for the purpose of purchasing a       take out a loan or access a credit
                                     home. If you have a mortgage,         card account.

                                                           Who Wants to Be Financially Responsible?               7
      Episode #4
                          Net Worth & Budgeting
 Statement of Net Worth
 Liquid Assets
 Lifestyle Assets         Statement of                      Cash Flow Statement
                          Net Worth                         Knowing how much you earn
 Investment Assets        To	manage	your	cash	flow	         versus how much you spend
                          efficiently,	you	must	be	         is extremely important. A
                          aware of your “net worth.” A      cash	flow	statement	allows	
 Cash Inflow              statement of net worth shows      you to see exactly where and
                          the sum of your total assets      how the money you earn is
 Cash Outflow             minus your total liabilities. A   spent.	Cash	flow	statements	
                          detailed explanation of assets    differ from statements of
u	 Cash Flow
                          and liabilities can be found      net worth in that the cash
 Cash Flow Statement      online in the Cram Session for    flow	statements	follow	your	
                          Net Worth and Budgeting.          financial	transactions	over	a	
                                                            specified	period	of	time,	while	
 Fixed Expenses
 Variable Expenses
 Monthly Budget
 Cash Surplus
u	 Cash Flow
 Credit/Debit Cards
 Personal Allowance

                                          Who Wants to Be Financially Responsible?             8
a statement of net worth shows
your financial situation at any
                                    Fixed and Variable
                                                                         Monthly Budget

                                                                         Once you establish your budget,

given moment.                       Budgets are set up similarly to      do not revise it during the first
                                    cash flow statements, except         month. After Month One, compare
Cash flow statements compare        that they represent a projection     your “earned” and “spent”
cash inflows and outflows to        of future income and expenses        dollars to those outlined in your
show net cash flow within a         rather than a record of past         budget. Then make the proper
specific period of time. Cash       transactions. When designing         adjustments during Month Two
inflow is known as “income,”        a budget, break down your            so that earned dollars and spent
while cash outflow is known as      expenses into two categories –       dollars align more closely with
“expense.” Total cash inflow,       “fixed” and “variable.” Fixed        your established budget figures.
minus total cash outflow, equals    expenses are those that don’t
net cash flow.                      change from month to month           Cash Surplus
                                    (e.g., rent, phone, auto loan).      Many financial advisors
Budgeting                           Variable expenses are those that     recommend that you save at
Failure to create and live within   do change from month to month        least ten percent of your gross

a budget is one reason many         (e.g., food, clothing). The goal     (pre-tax) earnings annually.
people end up in debt. Budgets      of creating a budget is to end up    This cash surplus can be used to

help manage cash flow so you        with a positive cash flow. If this   build your emergency fund and/
don’t spend more than you earn,     doesn’t appear possible, then you    or be applied to achieving other
and they enable you to set aside    need to spend less than you do       financial objectives.
savings for use in achieving        and/or increase your income.
future goals.

                                                         Who Wants to Be Financially Responsible?            9
        Episode #5
                          Identity Theft
 Shred It
 ATMs                     Shred It                         people do – you carry other
                          Identity theft, a deliberate     means of identification (e.g.,
 Phishing                 attempt by someone to            driver’s license, medical card,
                                                           auto registration) that can
 Hacking                  impersonate you in order
                          to achieve financial gain,       be stolen and used illegally.
 Internal Theft           is a fast-growing problem.       So, virtually everyone should
                          Those who use paper checks,      be concerned about identity
 Desktop Computers
                          electronic banking and credit/   theft. Bottom line: protect
 Laptop, Cell Phone or    debit cards to make purchases    your identity!
  PDA                     are particularly vulnerable.
                          Even if you were to use cash     Thieves actually do search
                                                           through garbage for account
                          exclusively – and few, if any
 War Dialer                                                numbers and ID information;
                                                           some even file change of
 Medical ID fraud                                          address forms with post
 Fraud Alerts                                              offices and creditors to
                                                           get personal information.
 Credit Freezes                                            That’s why it’s wise to shred
 Unauthorized Checking                                     anything that has your name
  Account Withdrawal                                       on it before discarding it.
                                                           Secure any financial records
u	 Flash Drive Caper
 The                                                       and bills in a locked cabinet.
                                                           More than half of all ID theft
 Intrusion Prevention
  Systems                                                  cases involve perpetrators
                                                           that are related or at least
 Zombie Debt                                               known to the victim.

u	 History Records
 Valuable Tips to Avoid                                    Most people think that using
  ID Theft                                                 a credit card is one of the
                                                           most secure ways to make a
 Valuable Tips if You
                                                           purchase. But thieves often
  Become a Victim of                                       employ an electronic device
  ID Theft                                                 known as a ‘skimmer’ to steal
                                                           identities. The skimmer is a
                                                           small, hand-held electronic
                                                           reader capable of picking up
                                                           information contained on the

                                          Who Wants to Be Financially Responsible?           10
magnetic strip of a credit card.   at work and home are                  Other valuable tips to help
After a card has been swiped at    usually equipped with                 you avoid ID theft, and
a super market checkout lane,      protection systems. The               actions you should take
in an ATM, in a department         same can probably be                  if you become an identity
store, the skimmer reads the       said for laptops and PDAs.            theft victim, can be found
swipe track, and the thief has     Portability, however,                 in the Cram Session for
immediate access to the wealth     introduces risk for theft             Identity Theft.
of information contained on your   or loss, so handle your
card’s magnetic strip.             portable electronic devices
                                   with care and concern!
You should always be aware of      The Flash Drive
who is nearby when you access      Caper

your account at an ATM. Thieves    Never employ the use
have a way of “stealing” a look    of a flash drive unless
when you punch in your ATM         you’re sure of its origin.

access code, so always block       Identity thieves will
the machine’s keyboard with        often conveniently
your body when you enter your      “discard” a

access information.                flash drive with
                                   embedded theft
Phishing                           software program or one that
When someone tries to access       contains a virus. Once plugged
sensitive information about your   into a computer that is part of a
financial records directly from    network the pirate flash drive can
you via email or telephone,        access much of that network’s
they are “phishing.” Phishers      information. Don’t ever allow
may attempt to lead you to         yourself to fall victim to a “flash
a legitimate-looking Web site      drive caper.”
that will seek your personal
information. Don’t fall for it!
If you own a portable, wireless
computer, be sure to secure
your information using encrypted
coding. Desktop computers

                                                         Who Wants to Be Financially Responsible?      11
      Episode #6
 Compound Interest
 Risk Tolerance          Spending all your hard-earned       Compound Interest
                         money is an expensive habit         A benefit to investing your
 Asset Allocation        that can cause serious financial    money is that your earnings
                         set-backs later in life. Stashing
u	 Write-offs
 Tax                                                         will compound over time.
                         money under your mattress           Compound interest means
u	 Delay, not Forgiven
 Tax                     also is an expensive habit.         your earnings from this year’s
                         If not invested productively,       investment will be reinvested
                         money loses value over time         as principal in the following
 Mutual Funds            due to a concept known as the       time period.
                         time value of money. That’s
 Index Funds
                         because inflation erodes the        Risk Tolerance and
 Dollar Cost Averaging   value of money.                     Asset Allocation
                                                             High risk investments don’t
 401(k) Plans
                         Inflation                           always produce higher
 Employer-match          The inflation rate can              rewards. You might earn a
  Contributions          fluctuate from year to year.        higher return, but you also
                         One of the first goals of           might suffer a greater loss
 Pre-tax Contributions   investing is to earn a rate of      than you would in a more
 Vesting Schedule        return that is higher than the      conservative investment. A
                         rate of inflation.                  key consideration for investors
 Traditional IRAs                                            is gaining an understanding
 Roth IRAs                                                   of your own personal risk
                                                             tolerance. The common rule
u	 Plans
 529                                                         of thumb suggests managing
                                                             risk by subtracting your age
                                                             from the number 100. The
                                                             result is the percentage of
                                                             your portfolio that should
                                                             be invested in more risky
                                                             assets like common stocks.
                                                             The process of deciding how
                                                             to allocate your money to
                                                             different investment types is
                                                             called asset allocation.

                                          Who Wants to Be Financially Responsible?             12
$                                   $
Stocks                              buy or sell decisions. Rather,        Traditional IRAs
There are different investment      the objective is to exactly match     The traditional Individual
types. Stock is an ownership        the returns of the market index       Retirement Account (IRA) is
interest in a corporation. To       that it follows. An index fund will   an opportunity to invest money
invest in stock, you must open      outperform three of every four        toward retirement, regardless
a brokerage account with a          mutual funds over time.               of whether your employer
financial intermediary. After you                                         sponsors a retirement plan.
deposit money in your brokerage     Dollar Cost Averaging                 The funds in the IRA account
account, you can instruct your      Dollar cost averaging is a simple     can be invested in mutual funds
broker to purchase shares of        but powerful way of investing your    or any other investment offered
stock on your behalf. Stock         money by taking the guesswork         by the custodian.
investing is logistically easy,     out of the market timing by
but financially and emotionally     trying to guess when the market       Roth IRAs
complicated for many investors.     is low and high. With dollar cost     The Roth IRA works similarly
                                    averaging, you invest a fixed         to a traditional IRA. It’s a non-
Mutual Funds                        dollar amount at regular intervals,   employer-sponsored retirement
You can invest in the stock         regardless of how well or poorly      account for individuals. The
market without having to master     the stock market is doing.            Roth IRA is unique because
the ability to successfully buy                                           contributions are never tax-

and sell individual stocks, by      401(k) Plans                          deductible and distributions
investing in a mutual fund. A       The 401(k) is an employer-            are entirely tax-free.
mutual fund contains money          sponsored retirement plan

that is pooled from thousands       which allows employees to             529 Plans
of small investors. The fund is     invest pre-tax dollars straight       A 529 plan is an investment
then professionally managed by      from their paychecks into a           vehicle designed to help people
fund managers who buy and sell      retirement account. Sometimes         pay for college. Plan assets are
stocks on behalf of the investors   the employer will match all or a      professionally managed either
who own shares in the fund.         portion of those contributions.       by the state treasurer’s office or
                                                                          an outside investment company
Index Funds                                                               hired to be the program manager.
An index fund is a mutual fund
which aims to exactly replicate                                           Further information on
the investment return of a                                                investment types and
particular stock market index                                             terminology can be found in the
such as the Dow Jones or                                                  Cram Session for Investing.
NASDAQ. The difference with
index funds is that the fund
manager doesn’t make any

                                                          Who Wants to Be Financially Responsible?             13
        Episode #7
                            FICO Credit Score
u   What is FICO
u   Reporting Agencies
u   Score                   What is FICO                         Score
                            FICO is an acronym for the Fair      Each time a store, car
u   How to Get FICO Score   Isaac Corporation. Founded           dealership, bank, etc., asks
u   Manage Finances         in 1956 by engineer Bill Fair        one of the credit reporting
                            and mathematician Earl Isaac,        agencies for your credit
u   Build up FICO Score     the company developed the            score, the data that agency
u   How to Keep Score       FICO score that measures a           has collected about you is
    High                    person’s credit risk. The FICO       processed through the FICO
                            score is based on a proprietary      model. Credit scores run from
u Who’s Looking at          formula owned exclusively by         a low of 300 to a high of 850.
    Credit Score            its developers.                      The national median credit
                                                                 score is 720.
 What will Hurt Credit
                            Reporting Agencies
                            There are three major credit         If you carry a credit score that
 Myths                      reporting agencies in the United     falls into the 600 to 620 area,
                            States – Equifax, Experian and       your chances of getting a loan,
                            TransUnion. All three use the        credit card, etc., are not very
                            FICO score system to determine       promising. A score in this area
                            an individual’s credit worthiness.   tells lenders and credit card
                            The agencies are privately           issuers that you are a poor
                            held companies. Each tracks          credit risk. On the other hand,
                            your personal charge account         a score of 700 to 750 would
                            balances and payment patterns.       tend to positively influence a
                            They establish your credit score     financial institution’s decision
                            based on, among other criteria,      to provide the loan you seek.
                            your bill-paying history. Your       Most lenders will assess
                            credit score is an indicator of      your credit report before
                            how much risk you pose as a          committing to do business
                            borrower or credit seeker.           with you, so it pays to
                                                                 maintain a high credit score.

                                             Who Wants to Be Financially Responsible?               14
How to Get FICO Score                  How to Keep Score High                 Some credit card companies
It would be a good idea to monitor     Pay cash for most of your needs        will try to lower your credit
your credit report and score on a      while charging only items you          limit for a variety of reasons.
regular basis. You have the right to   know you’ll be able to pay for         If that happens, call your card
receive your credit report, without    when your monthly credit card          company and ask them to
charge, once a year from one or all    statement arrives. Don’t carry         reconsider. It is also important
of the credit reporting agencies (go   month-to-month balances on             not to respond to “pre-approved”
to        your credit card. Pay off your         offers for accounts from different
Those “reports” will reflect your      entire balance each month.             companies at the same time.
credit history but not your credit                                            That action, too, will lower your
“score’” However, you can purchase     Keep in mind that your credit          score.
your score from the reporting          score is penalized when your
agencies for a nominal fee (go to      credit report shows high levels        Who’s Looking at                       of debt in relation to your            Credit Score
                                       amount of available credit. So,        The bottom line: expect
Regular monitoring of your credit      keep your credit utilization below     businesses, banks and credit card
report is also a good way to           25 percent of your established         companies to use your FICO score
learn if you’ve been a victim of       credit line! Don’t close accounts      and credit report to qualify you for
identity theft and to be sure that     because you don’t use them.            the credit you seek. Do everything

all information contained in the       Closing an account will lower          you can to always maintain an
report is correct and up-to-date.      your credit score because it           impressive credit score!
                                       lowers the total amount of credit

Manage Finances                        financial institutions and retailers   Steps you can take to improve
If your finances are a wreck,          have made available to you.            your credit score and maintain
you’ll need to stabilize your                                                 it at a satisfactory level can be
credit picture by harnessing your                                             found online in the Cram Session
spending and charging habits.                                                 for FICO Credit Score.
Once you’ve taken control of
the problem, apply for one –
just one – of the major credit
cards. Should your application be
turned down, try to establish a
“secured” card arrangement by
making an upfront deposit with
one of the credit card companies.
That will establish a line of credit
on the card equal to the amount
of your upfront deposit.

                                                              Who Wants to Be Financially Responsible?               15
  Wh o Wants to Be

Financially Responsible?

           Brought to you
                by the
  CT Department of Higher Education
               And The
      University of Connecticut

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