Recommended
More Related Content
What's hot
What's hot (20)
Similar to Intro to credit rev 1517
Similar to Intro to credit rev 1517 (20)
More from OriginSC
Recently uploaded
Recently uploaded (20)
Intro to credit rev 1517
- 2. Origin SC • About Us • Fraud/Privacy Policy • Client Profile
- 3. Why is credit important? • Credit is based on historical data. Typically a person’s past decisions indicate how a person will make future decisions • Credit can affect many aspects of your life whether you realize it or not – Renting an apartment – Utilities – Insurance – Buying a house or a car – Getting a job
- 4. How can I receive my credit report? • Per the Fair and Accurate Credit Transaction Act (FACTA), consumers are able to pull their credit for free from all three credit bureaus (Equifax, Experian, and TransUnion) – Only get reports, not your score – Can go to www.annualcreditreport.com or submit a written request. • Consumers may also go directly to the credit bureaus to receive a report and score. • Credit counseling agencies also provide credit reports and assistance in understanding them.
- 5. Understanding your credit report • Personal Information – name, address, SSN, date of birth, employment history • Credit History – account details such as date of opening, balance, payment history • Inquiries – records of who has viewed your credit report • Public Records and Collections – liens, bankruptcies, judgments • REVIEW ALL ITEMS FOR ACCURACY – including personal information – FTC study in Feb 2013 says that 1 in 5 consumers has an error on credit report and 1 in 10 has an error that may lower their score.
- 6. Types of credit • Revolving credit – Credit cards, charge cards • Installment credit – Mortgage loans, car loans, student loans – any type of loan • Service credit – Utilities • Your credit report will typically refer to credit in these terms – Note that service credit does not show up on a credit report unless it has been sold to a collection agency
- 7. True or False?? After paying off a balance on a credit card, you should close the account.
- 8. Cost analysis of retail cards Paying Cash for Item Cost of Purchase $300 Total Cost of Purchase $300 Opening Retail Store Card Cost of Purchase $300 Minus 10% savings at register $30 Cost of Purchase $270 Plus 18% APR $48.60 Cost of purchase if paid in 1 month $318.60 Cost of purchase if only minimum payments (19 months) $362.11
- 9. FALSE! • In order to have credit (good or bad), you must have available credit. • Closing an account could actually decrease your credit score.
- 10. Components of the FICO Score Payment History Amounts Owed Length of Credit History Types of Credit New Credit • Payment History = 35% Have you paid your accounts on time? • Amounts Owed = 30% How much of the available credit are you using? • Length of Credit History = 15% How long have you had your accounts? • Types of Credit = 10% Do you have a healthy mix of installment and revolving debt? • New Credit = 10% Are you taking on more debt?
- 12. FICO vs Vantage • FICO – Created and calculated by a 3rd party – Requires at least 1 account opened and reported for at least 6 months – Range is 350-850 – Used in ~90% of credit decisions • Vantage – Created by the 3 major credit bureaus – Requires only 1 month of reporting – Range is 300-850 (used to be 501-990) and usually has a letter grade associated with the score (A-F) – Not nearly as widely used
- 13. Did You Know? • A 60 day late payment that is 3 years old will affect your score less than a 30-day late payment from 2 months ago.
- 14. Credit Tips • Do not come close to “maxing out” credit cards – use no more than 30% of the available credit limit • Pay everything on time and the amount agreed • Be careful when closing accounts
- 15. Credit Tips Cont… • Don’t apply for too much credit – Soft inquiries vs hard inquiries – Shopping windows • Only invest in credit and debt if you know that you can afford it. Debt can become overwhelming and it is easy to get in over your head
- 16. Where to go with bad credit?? • Credit Counseling – Non-profit – Low fees for service – Offer advice, assistance to improve credit scores – Provide action plans to keep the consumer accountable and involved – Licensed • Credit Repair – For profit – Charge high fees – Will dispute all items on a credit report in attempt to get removed from report – Cannot guarantee services – NOT LICENSED
- 18. Overwhelmed with debt? • There are options available to those who are struggling with debt. • Make sure organization is reputable and licensed.
- 19. Managing on your own • First, look at your budget. Budgeting is the key to managing your finances – Making Ends Meet Workshop • Create a plan for handling your debt – Make a list of your debts and their payments – Keep payments the same as you pay down your debt – Power Pay Method – Stick to it!
- 20. DMP options • Debt Management – Non-profit – No high up front fees – Works with creditors in reducing payments & interest rates – Consolidated payment – Will stop late/over-limit fees and bring accounts current. • Debt Settlement – For profit – Charge high fees – Accounts get charged off and settlements are offered – Cannot protect against additional fees or legal action – Destroys credit scores
- 21. How to identify a reputable credit counseling agency • All credit counseling agencies and counselors MUST be licensed with the SC Dept. of Consumer Affairs – 1.800.922.1594 or www.consumer.sc.gov • Members of National Foundation for Credit Counseling – www.nfcc.org • HUD Approved • Should not charge high fees for service • IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS!
- 22. True or False? • Is it legal for a lender in South Carolina to have an interest rate of 350%?
- 23. TRUE! • In South Carolina, as in many states, there is not a cap on how much interest a lender can charge a consumer as long as the rate is posted or otherwise provided to the consumer.
- 24. Predatory Lending • Those who exploit borrowers by charging extremely high interest rates or fees, and a borrower’s ability to repay the debt. • Includes: technically legal, but high cost and deceptive sales practices. • Target those who need money immediately and can’t wait or those who can’t qualify or distrust bank loans. • Examples include: – Payday loans – Title loans – Check cashing establishments – Pawnshops – Finance Companies – Tax refund anticipation loans •
- 25. Thank you! Let us know how we did today for a chance to win a $25 gift card! Just log onto www.originSC.org/clientsurvey Origin SC 843.735.7802 | www.OriginSC.org Like us on Facebook at www.facebook.com/homestartshere Follow us on Twitter @origin_sc
Editor's Notes
- Do not come close to “maxing out” credit cards. Be careful when closing accounts. Debt can become overwhelming and it is easy to get in over your head.