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American Consumers
• The average salary in the U.S is $50,233.00 • The average consumer has 13 credit cards• The average Credit card debt is $8,562• The average car loan amount is $23,801• The average house payment is $684• The average car payment is $442
BUILD to establish, increase, or strengthen
(often fol. by up): to build a business; to build up one's hopes, build wealth
Do This!
Annual Income $ X 4 Years
Now that you have that figure in mind how is your life going to be change four years from now?
--For better or For worse--
POINTS of POWER• Discover where you are financially
• Discover where you want to be financially
• Discover how to get where you want to be financially
SMSL
Know where you want to be
“If you don’t know where you are going how do you know when you get there?”
Know where you want to be
Set realistic GOALS!!Goals should be:
SpecificMeasurableAchievableRelevantTime
“The definition of insanity is doing the same thing over and over and expecting a different result” – Albert Einstein
Credit Reporting Agencies (CRA)
• Currently there are three CRA’s these companies make money by compiling and reporting financial information about consumers.
• The information is sold to institutions that need to make financial decisions about individuals
Identifying Information
The information contained in this section comes from the application that is filled out supplied to lenders from you. This information is NOT used in scoring only for identification purposes. The information in this section includes:
• Name
• Address
• Social Security Number
• Date of Birth
• Employment information
Trade LinesLenders report your account information in this section, they report each account you have, the type of account (bankcard, auto loan, etc), the date opened, credit limit or loan amount and most importantly your PAYMENT HISTORY.
This section is usually rated on a scale from 1 to 10
• 1 = paid on time
• 2 = 30 days late
• 3 = 90 days late
• 9 = charged off
Your Credit Report
Because the are three major CRAs you actually have three or more credit reports. Each agency formats the information they have on file differently. However each report will have the information broken into four main sections:
•Identifying Information
•Trade Lines
•Inquires
•Public Record & Collections items
Every time you apply for credit you authorize lenders to ask for your credit report. Lenders are interested in knowing if you are actively looking for more credit and why.
Inquires are listed on your report for two years, this list tells everyone who has requested your report during that time period. This list is further broken down into:
• voluntary inquiries
• involuntary inquires
Your Credit Report
Public Record & Collections
The Credit Reporting Agencies also report information from state and county courts. Information like liens, bankruptcies, foreclosures, etc.. Information from overdue debt collectors is also on your report
Common ErrorsWhen there is an error on your credit report this information is usually do to human error. This typically happens because:
•You applied for credit under a different name.
•Someone made a clerical error in reading or entering names and addresses
•Inaccurate social security number give
•Similar names (Sr, Jr, II, or III)
•Debt applied to the wrong account
Your FICO score
When determining your credit worthiness lenders also use a score to determine the risk of doing business with individuals.
The score used to rate your credit risk is called your FICO® score. This three digit number
Your score ranges from:
350 - 850
National distribution of FICO scores
1%
12%
20%
16%
12%
6%5%
28%
0%
5%
10%
15%
20%
25%
30%
up to499
500-549 550-599 600-649 650-699 700-749 750-799 800+
FICO score range
% o
f Po
pul
atio
n
Your FICO score
WB Pg 6
The FICO® Scores are calculated from several different credit data in your reports. Which means that an individual could have three different scores from all three agencies
Individuals credit scores are based on five categories:
•Payment History 35%
•Amounts Owed 30%
•Length of Credit 15%
•New Credit 10%
•Types of Credit 10%
Your FICO score
Please Note• A score takes into consideration all these categories
of information, not just one or two. • Your score considers both positive and negative
information in your credit report. • Your FICO score only looks at information in your
credit report. • The importance of any factor depends on the overall
information in your credit report.