1. Credit Scores & Reports

2. Wise Use of Credit
O It’s about behavior, not dollars!
O To purchase assets
O Home
O Education
O For convenience
O To take advantage of sales
O Emergencies (convenience)
O “Big Ticket” items

3. Unwise Use of Credit
O To purchase consumables
O Impulse buying
O Spending for status
O Retaliatory spending (couples)
O Spending to feel good
O Everyday living expenses

4. Credit Scores
O What Is A Credit Score?
O The score given to an individual to determine their
credit worthiness. FICO and Vantage.
O Who checks your credit score?
O Credit Card Companies
O Lenders
O Insurance Companies
O Employers
O Cell Phone and Utility Companies

5. How Your Score
Is Calculated
FICO® scores are calculated based on your rating
in five general categories:
2)Payment History
3)Amounts Owed
4)Length Of Credit History
5)New Credit
6)Types Of Credit Used

6. What’s A Good Score?
O FICO Scores Range From 300 – 850
O Recent changes in the economy have changed what
lenders view as a very good score.
O In the eyes of most lenders, FICO credit scores above 760
receive the best rates. 700-759 are considered very good.

7. Your Credit Report
O A credit report is a report containing a detailed
credit history of an individual.
O What’s On Your Credit Report?
O Personal Information (Name, SSN, Etc.)
O Public Records & Collection Accounts (Bankruptcies,
Foreclosures, Etc.)
O Your Credit History & Current Obligations
O Credit Inquiries

8. How To Check Your
Credit Report & Score
O You are entitled to 1 free credit report a year from each of
the 3 major credit bureaus.
O To request your free credit report visit
www.annualcreditreport.com
O You can also request your credit score.
A small fee may apply.

9. Credit Reports
O Accurate Negative Information
O Pay up and wait
O Two years for inquiries and payments
O Seven years for most information
O Ten years for bankruptcies
O Criminal Convictions—no limit
O The seven-year period starts from the date that the event took
place

10. Credit Reports
O Correcting Wrong Information
1. Inform one of the Credit Reporting Agencies: Equifax, Transunion,
or Experian in writing. Dispute forms included on websites.
2. Credit Reporting Agency investigates, usually within 30 days.
3. Credit Reporting Agency provides you with written results and a
copy of Credit Report.
4. Credit Reporting Agency sends notices to the other two Agencies.
5. If not resolved, you can have a statement of dispute included in
your file. Also, tell creditor that you disputed an item.
*You have the right to put a statement of
up to 100 words on your Credit Report*

11. Debt: How Much is Too Much?
Calculate your
debt-to-income
ratio Debt
toInco
Hand me Ratio
out

12. Warning Signs
O Not paying off each month
O Making only minimum payments
O Gradually more income committed to debt repayments
O Falling behind on payments
O Using cash advances to meet monthly living expenses

13. Other Indicators
O Little or no money in savings
O Dependent on second job to make ends meet
O Paying over 20% of net income per month to creditors
O At or near credit limits most of the time

14. Critical Point
O Rotating bills
(paying some this month, some next month)
O Using credit to pay credit
O Being denied additional credit
O Dishonesty with spouse about debts
O Use of consolidation loans to reduce payments

15. Recovering from Debt
O Take Charge! Construct a budget and
spending plan, prioritize debts
O Construct a “power payment” plan
O Talk to Your Creditors

16. Improving Credit
Scores
O Pay Bills On Time (Get current, stay current)
O Pay Off Debt – Don’t Move It Around
O Don’t Close Unused Credit Cards As A Short-Term Strategy To
Raise Your Score
O Don’t Open New Credit You Don’t Need.

17. Summary
O Keep your budget up-to-date
O Calculate your Debt-to-Income Ratio
O Plan purchases
O Shop for credit
O Check credit report annually
O Build wealth, not debt