Managing Your Credit

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Managing Your Credit . Managing Your Credit. Establishing and maintaining good credit can provide many benefits to your financial future. . To Do List. Set up a realistic budget and stick to it. A budget template is available at . - PowerPoint PPT Presentation

Text of Managing Your Credit

Slide 1

Managing Your Credit

1Materials recommended for this presentation:

Managing Your Credit brochureCopies of presentation for participantsIf possible, access to a computer lab for each participant to download a credit report.Managing Your CreditEstablishing andmaintaining good creditcan provide manybenefits to yourfinancial future.

2To Do ListSet up a realistic budget and stick to it. A budget template is available at

Open up a checking account and a savings account if you have not done so already. College Students should check with their schools to see which local banks offer sign-up incentives for students.Evaluate your current credit situation.

3If you have not done so already, please do the following items to ensure a better foundation when managing credit. A budget is necessary to make sure you have the money to make payments.A checking/savings account is necessary to hold that money until time to make the payments. Credit is all about the timeliness of payments and the amount of your payments!If you already have credit cards, evaluate your current interest rate(s) and consider switching to a lower interest rate card. Write down each of your cards and the amount owed. Set a goal to pay down the debt as soon as possible. Decide how you will approach this pay down goal: largest amount to smallest? Smallest to largest? Choose a method that works with your budget and financial goals.Establishing Good CreditKnow what type of accounts show on your credit report. Review your credit report annually.Verify that the information on your credit report is accurate.Pay the minimum balance (or more) ON TIME each month.Avoid going over your credit limit.Cancel credit cards you are not using or do not anticipate using.

4(read slide)Charge only what you can afford to repay.Try to make a payment larger than the minimum amount due in order to reduce the balance and pay off the card at a faster rate.Protect yourself from credit card fraud. Sign your card right away. Keep your card in a safe place. Shred credit card receipts once your monthly statement has been verified against the receipts.Keep your address current with the credit card company so your bill gets delivered promptly. Sign up for E-Statements, if available.

5Your Credit ReputationCharacter - summarizes a lenders sense of how responsibly you handle credit obligations. Capacity - is defined as the financial ability to assume a certain amount of debt. Capital - consists of the financial assets at your disposal to pay off debt if your character and capacity do not prove sufficient. This might be your car, home, stocks, bonds, mutual funds, etc.

6Lenders review your credit background to determine how much credit (if any) to grant you. They are looking for the three Cs. (read slide)Credit Reports and Credit Reporting AgenciesVisit to obtain a free credit report.You may also contact the three major national credit reporting agencies directly: or or or 1-800-888-4213Consumers are encouraged to review all three reports, as information may vary from one report to another.

7There are three national credit reporting agencies: Equifax, Experian, and Transunion. You are entitled to ONE free credit report per year from each agency. Your Credit Score Lenders track your credit score and use it to determine if they should: offer new credit, increase or decrease your interest rate, and/or increase or decrease your credit limit. A good credit score is a vital part of your financial health.While a credit report is free, there is a small fee involved for requesting a credit score. For details visit or

8Credit scores are based on the information contained in your credit report. This number tells lenders how likely you are to make your credit payment on time. Credit scores can affect future credit, interest rates, required deposits (housing, electricity, phone) and even employment. (read slide)Credit Scoring TableCredit ScoreDescription730 -850Excellent700 729Great670 699Good585 699Average300 584Bad

The credit rating scale maximum and minimum stretches from 850-300. While the highest score may be totally unattainable, anything in its vicinity is considered to be an excellent score.

9Credit Scoring TableDetermining FactorWeight PercentageDescriptionPayment History35%How particular you are in paying your credit card bills, loan installments and dealing with any form of debt affects your credit score.Debt/Amount Owed30%Next most important factor that affects your credit score is the amount of money you owe on each of your financial accounts.Credit History Length15%The length of time over which you have used credit lines and your banking accounts also influence the score.New Credit Lines Used10%The number of new credit lines used or banking accounts recently opened impacts your score.Credit Types Used10%The range of different credit types used will also influence the credit rating.

10Credit Report VerificationPersonal Credit Account Public RecordsNegative InformationInquiries

11When reviewing your credit report, make sure the information reported is correct. Check the following:Personal identifying information name, Social Security Number, date of birth, current and previous addresses, and employers. Credit account information date opened, credit limit or loan amount balances carried, if any, and payment history. Public record information bankruptcy, tax and other liens, judgments, (in some states) overdue child support payments, and overdue alimony support payments. Negative information - stays on your credit report for seven years. Positive information stays indefinitely. Records of inquiries stay on the credit report for six months to two years, depending on the type of inquiry. You may access any of the credit reporting agencies websites to see a sample credit report. Most of these sites have excellent explanations and descriptions of how to interpret the credit report.

Correcting Errors on Your Credit Report You have the right to file a Consumer Dispute with the applicable credit reporting agency. Credit reporting agencies are obligated to verify the accuracy of their reports when notified of such disputes. If you pulled your credit report through an online site, Consumer Disputes can be filed electronically. For more information on how to dispute credit report errors, please visit:

12If you believe your credit report does not accurately reflect the current status of your accounts, you have the right to file a consumer dispute with the applicable reporting agency.

Many disputes can be filed electronically. Agencies are obligated to investigate the error and report back to you their findings.

The Federal Trade Commission offers valuable information pertaining to credit report errors and how to dispute them.Protecting your IdentityLeave important documents at home!Keep documents in a safe place.Use a post office box if necessary to receive important information.Protect your Social Security Number.Protect PINs and computer passwords.

13Leave important documents at home. Do not carry unnecessary credit cards or identification. Keep all documents with personal information, like canceled checks, credit card receipts, copies of credit applications, insurance forms, and old credit or debit/ATM cards in a safe place and shred them when you no longer need them. Use a post office box or a mailbox to avoid any concerns about a thief taking important information. Do not give your Social Security Number or account numbers to anyone over the phone unless you initiated the call and are certain you are speaking to a representative of a reputable organization or government institution. Protect your PIN numbers and computer passwords. Use a random combination of letters and numbers and change them every six months. Do not use family or pet names, or dates that can be easily deduced. Never carry this information with you.

Protecting your IdentityPick up new checks at the bank not from your mailbox.Check your credit report annually.Protect your drivers license.Report suspected fraudulent activity or stolen cards to appropriate office.

14If possible, pick up newly ordered checks at the bank to avoid blank checks in your mailbox if no lock for security. Do not put any personal information on your checks.Check your credit report annually. Fill out a consumer dispute, if necessary. If you suspect someone is using your drivers license number, call the Florida Department of Highway Safety and Motor Vehicles (DHSMV) or your states equivalent organization. The DHSMV can tell you if another license has been issued in your name. If this is the case, get a new number and ask the DHSMV to investigate the identity theft. The DHSMV can block your information from being released based on verifying identification. If your Social Security Number was used fraudulently, report the problem to the Social Security Administration Fraud Hotline at 1-800-269-0271. Call Social Security to verify the accuracy of your reported earnings and to verify that your identifying information is reported correctly.

If your Identity is Stolen, immediately contact:

15Creditors Notify all creditors and financial institutions in writing and by phone that your name and accounts have been used without your permission. If personal checks were stolen, close all checking accounts. Close all current credit card accounts and request a statement of information about the last five to ten purchases on each credit card account. This will inform you of