Learn how to conquer your credit score.

1. CONQUER YOUR CREDIT SCORE Presented by Barbara J. Stark

2. What is a credit score? A credit score is a formula that is used to predict risk for lenders. To create a credit score, analysts use information in credit reports, account histories and/or applications. Their goal is to accurately identity the consistency of your timely paid accounts, as well as your delinquent accounts. The result of all this computing and analyzing is a number that is your credit score.

3. Who’s keeping score? Your credit score is basically used to predict the possibility that you won’t pay your bills. Scores are compiled y Fair Isaac Corp. and are sometimes called FICO scores. The top possible number is 850, but topping 800 is fairly unrealistic. A median score falls in the 720-725 range, meaning ½ of consumers fall about that point, half below. Even if you haven’t given your FICO score much thought, there are plenty of others who have or will, so you’ll want to aim for the mid-700s to make the best impression.

4. When it comes to your credit score, aim high! 350 450 550 650 750 850 Lowest Highest Very Poor Poor Excellent Fair Good Source: www.truecredit.com

5. How does my Score Measure Up? Source: MyFico.com

6. HOW MUCH DO YOU KNOW ABOUT YOUR CREDIT SCORE? WE ALL KNOW that folks with lousy credit have a harder time obtaining loans. And that seems reasonable, right? After all, who wants to lend money to someone with a poor record of paying it back on time?

7. HOW MUCH DO YOU KNOW ABOUT YOUR CREDIT SCORE? But these days, having some black marks on your credit report may mean more than just paying a higher interest rate on your credit card. A growing number of companies, many of them having nothing to do with the business of offering credit, are also scrutinizing the data on those reports to decide whether to do business with you, and how much to charge.

8. How much do you know about your credit score? That 3-digit number is tied inseparably to our financial lives, yet many adults haven’t given it the attention it deserves! Your score can play a role in your ability to rent an apartment, qualify for a loan or even get a job. It can also affect how much you’ll pay on interest charges, insurance, and even cell phone contracts.

9. WHO’S LOOKING AT YOUR CREDIT SCORE? 5 PEOPLE WHO CHECK YOUR CREDIT

10. Who’s keeping score? Lenders use credit scores to help decide: Whether to issue you a new account or loan Raise the credit limit on an existing account Decide what interest rate to charge on a new or existing loan (home mortgage or car loan, for example) Having a good rating can help you qualify for the best rates on a mortgage, car loan, credit card, and even a small business loan

11. Who’s keeping score? Insurers Use Credit Scores To Help Them Decide: Whether to issue new auto or homeowner’s policies What rate to charge for those policies Whether to renew existing policies A survey by Consumer Reports among 8 popular auto insurers found that drivers with top scores pay up to 31% less on premiums while those with bad scores pay as much as 143% more

12. Who’s keeping score? Landlords Use Credit Scores To Help Them Decide: Whether or not you will be responsible in paying your rent on time Whether they will “risk” renting to you Whether you may have to find a friend or relative to co-sign your lease Whether you may be required to pay a higher rent or leave a security deposit

13. Who’s keeping score?employers use credit scores to help them decide: Whether or not you are a good candidate for the position and company Whether or not an individual can/should be bonded or certified What type of position an individual would be best suited for (especially is money handling is involved) Why? Bad credit can be a signal of irresponsibility. Employers also worry that you’ll spend more time fretting about your financial woes than concentrating on the job

14. Who’s keeping score?Cell phone carriers and utility providers use credit scores to help them decide: Whether or not you are responsible and will pay your bill each month Whether or not you qualify for the best plan rates Whether you will be required to pay a deposit Whether they will accept you and provide service at all

15. Why build a stellar score? If you make building a healthy credit score a priority, you could actually save thousands of dollars over your lifetime. However, if you don’t take your credit seriously, a bad score will cost you – in more ways than one!

16. The True Cost Of Your Score Meet Jim: Makes all his credit card and car payments on time; never maxed out his credit cards and often paid more than the minimum payments Meet Mark: Frequently pays late, overextended his credit cards and applied for new credit to bail him out of his mismanaged debts Now both are ready to buy homes and they each apply for a $250,000 30-year mortgage

17. The True Cost Of Your Score Jim: Through his responsibility, he’s built a credit score of 750, qualifying him for a home loan with a 6.2% interest rate. Mark: With a credit score of 650, he qualifies for a home loan with an interest rate of 7.3%. Jim’s monthly mortgage payment = $1,536 Mark’s monthly mortgage payment = $1,718 That’s a difference of $182 per month If they both live in their homes for 10 years, Mark will pay $21,840 more in monthly payments than Jim.

18. CREDIT SCORE FACTS Your credit score changes frequently as info is updated in your credit reports Lenders use different credit scoring formulas customized for their loan products when calculating your score Credit scores are calculated using the info in your credit report, even if that info is not correct! The 3 major credit bureaus are Equifax, Experian and TransUnion Since your credit score varies from each of the bureaus, lenders will use the middle score Remember, with a FICO score, the higher the number, the better!

19. What’s in a credit score? There are 5 categories of factors that go into computing your credit score: Payment history 35% Amounts you owe 30% Length of credit history 15% New credit 10% Type of credit in use 10% 100%

20. COMPUTING YOUR CREDIT SCORE New Credit 10% Payment History 35% Amounts owed 30% 15% 10% Types of Credit Used Length of Credit History

22. The amounts you owe (how much debt do you carry?)Together, these categories comprise 2/3 of your credit score. Want to improve your credit score? Focus on paying your bills on time and paying down your debt!

23. How Long Will Negative Info Hurt My Credit Score? Late payments stay on your credit report up to 7 years Collection accounts & charge-offs are reported for 7 years from the date you fell behind up to the collection account or charge-off date Bankruptcies are reported for 10 years from the date of filing Unpaid tax liens may be reported indefinitely until the lien is paid Paid tax liens are reported for 7 years

24. How Can I Get My Credit Score? You can purchase your credit score when you order your free credit report You can receive free credit reports annually by logging onto to www.annualcreditreport.comor by calling 877-322-8228 It’s an excellent idea to check your credit report and find out what your score is at least 3 months before you make a major purchase like a car or home to give yourself time to correct any mistakes or problems

25. How To Contact The Credit Bureaus Directly Equifax Equifax Credit Information Services, Inc. PO Box 740241 Atlanta, GA 30374 1-888-766-0008 www.equifax.com Experian National Consumer Assistance Center PO Box 2002 Allen, TX 75013 1-888-397-3742 www.experian.com TransUnion, LLC Consumer Disclosure Center PO Box 1000 Chester, PA 19022 1-800-888-4213 www.tuc.com

26. How To Build or Re-Build Good Credit Start with a secured MasterCard or Visa credit card (make a deposit with the lender and this becomes your credit limit) Pay on time and in full each month to build good credit history Switch to an unsecured card after 1 year and get your deposit back

27. How Can I Boost My Credit Score? Always pay on time! 35% of your score depends on your payment history. Don’t max out your credit cards! 30% of your score is based on how much you owe. You want to keep your “credit utilization” ratio – the % of your credit limit that you’ve actually used – no higher than 30% of your available credit. Pay off your balances in full every month. Cont’d

28. How Can I Boost My Credit Score? (cont’d) Start while you’re young. 15% depends on the average age of your accounts. Avoid opening several accounts at once. Not only will this lower the average age of your accounts, but lenders will worry that you might go on a borrowing binge. 10% of your score depends on new credit. Get the right kind of credit. This accounts for the final 10% f your score. Revolving credit (such as credit cards) carry more weight than installment debt (car loans and mortgages). Don’t close old accounts. This will shorten the average length of your credit history and hurt your credit score.

29. Do Credit Inquiries Hurt My Credit Score? Anytime a lender, creditor or employer checks your credit report an inquiry is created. Too many inquiries in the last 6-12 months can negatively impact your score. These inquiries DO NOT hurt your credit score: Consumer-initiated inquiries (when you order your own credit report or score) Promotional inquiries (when your file is reviewed for a pre-approved credit card or line of credit) Employment or insurance related inquiries To avoid penalizing consumers who are shopping for mortgages or car loans, inquiries for these types of loans within a short period of time are grouped together and often count as a single inquiry. There is NO such buffer for inquiries generated by applying for credit cards.

30. How Will Credit Counseling Affect My Credit Score? Many people worry that their credit will be damaged if they enter a debt management program through a credit counseling organization. In fact, their credit score may actually improve if they successfully stick to the repayment plan.

31. How Will Credit Counseling Affect My Credit Score? Credit counseling is not considered in the FICO score calculation so there is no negative impact. Many creditors do not report to the bureaus that the account is being repaid through a counseling agency. Most creditors “re-age” accounts that are behind when a consumer enters a credit counseling program. Late payments prior to beginning the counseling program are removed. Entering into a credit counseling program will help you to avoid further late payments, credit problems and even bankruptcy - which can all significantly hurt your credit. By paying down your debt through a counseling program, your credit score improves since the amount of debt you carry is one of the major factors in calculating your credit score.

32. If you need help Conquering Your Credit Score, contact: 14051 NW 14th StreetSunrise, FL 33323www.americandebtcounseling.org(888) DEBT USA

33. Good Luck! Thank you!