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U N D E R S T A N D I N G Y O U R C R E D I T

R E P O R T & S C O R E

(2)

GREENPATH SERVICES

F I N A N C I A L A S S E S S M E N T S

H O U S I N G C O U N S E L I N G

C R E D I T R E P O R T R E V I E W

D E B T

M A N A G E M E N T

(3)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(4)

W h y i s c r e d i t

i m p o r t a n t ?

?

(5)

GOOD CREDIT

L a n d Y o u r

D r e a m J o b

(6)

G e t t i n g a L o a n W h e n Y o u N e e d I t

GOOD CREDIT

(7)

GOOD CREDIT

R e n t i n g o r

B u y i n g Y o u r

O w n P l a c e

(8)

$ 2 5 0 , 0 0 0 3 0 - Y e a r F i x e d R a t e M o r t g a g e

Diego

Credit Score 660 Interest Rate 5.25%

Monthly

Payment $1,381

Total Paid over

30 Years $496,984

Angela

Credit Score 750 Interest Rate 4.63%

Monthly

Payment $1,285

Total Paid over

30 Years $462,726

G o o d C r e d i t S a v e d A n g e l a $ 3 4 , 2 5 8 !

(9)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(10)

B E H A V I O R S E L F - I M A G E

CREDIT BUREAUS

(11)

I D E N T I F Y I N G I N F O R M A T I O N

O P E N

A C C O U N T S

C L O S E D A C C O U N T S

C O L L E C T I O N R E C O R D S

I N Q U I R I E S

W H A T ’ S O N Y O U R C R E D I T

R E P O R T ?

C O N S U M E R S T A T E M E N T

(12)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(13)

CREDIT REPORT

You can receive your credit report ONLINE or by MAIL

Central Source LLC P.O. Box 105283

Atlanta, GA 30348-5283

Phone: 877-322-8228

annualcreditreport.com

(14)

CREDIT REPORT

Only the REPORTS are free.

Obtaining scores will

cost about $6-$8 per

credit bureau.

(15)

• Inquiries

2 Y E A R S 7 Y E A R S 1 0 Y E A R S

• Late Payments

• Collection accounts

• Foreclosures

• Chapter 13 Bankruptcy

• Chapter 7 Bankruptcy

(16)

GOOD NEWS!

Positive credit activity stays on your report indefinitely!

Example: on-time payments for credit cards & mortgages

(17)

Send copies, keep records, document the claim.

Didn’t like the outcome?

File a complaint with

Consumer Financial Protection Bureau (CFPB)

8 5 5 - 4 1 1 - 2 3 7 2

File a dispute online, phone or by mail.

(18)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(19)

CREDIT SCORES

• FICO is the most widely used scoring model.

• The 3 digit number reflects your credit risk and likelihood of repayment.

H I G H E R R I S K L O W E R R I S K

6 7 0 - 7 3 9

G O O D

(20)

? What are the factors that impact a

credit score?

(21)

CREDIT SCORE BREAKDOWN

35% 30% 15% 10% 10%

Payment History

Amounts Owed / Use of

Available Credit

Length of Credit History

Types of Credit Used/

Credit Mix

New Credit

(22)

CREDIT SCORE BREAKDOWN

35% 30% 15% 10% 10%

Payment History

Amounts Owed / Use of

Available Credit

Length of Credit History

Types of Credit Used/

Credit Mix

New Credit

The largest impact on your credit score is your payment history, or how well you pay back your debts over time. This includes delinquencies and public record.

(23)

CREDIT SCORE BREAKDOWN

35% 30% 15% 10% 10%

Payment History

Amounts Owed / Use of

Available Credit

Length of Credit History

Types of Credit Used/

Credit Mix

New Credit

This is the amount of credit you are using versus what is available to you. Rule of thumb is to target using only 30% of available credit.

(24)

CREDIT SCORE BREAKDOWN

35% 30% 15% 10% 10%

Payment History

Amounts Owed / Use of

Available Credit

Length of Credit History

Types of Credit Used/

Credit Mix

New Credit

The longer you have established a good credit history, the more trust you have built up.

(25)

CREDIT SCORE BREAKDOWN

35% 30% 15% 10% 10%

Payment History

Amounts Owed / Use of

Available Credit

Length of Credit History

Types of Credit Used/

Credit Mix

New Credit

Your score is impacted based on the types of credit you have, such as revolving lines of credit or fixed installment loans.

(26)

CREDIT SCORE BREAKDOWN

35% 30% 15% 10% 10%

Payment History

Amounts Owed / Use of

Available Credit

Length of Credit History

Types of Credit Used/

Credit Mix

New Credit

If someone is applying for too much new credit that can indicate that they don’t have a

plan for how to pay their debt back and they are living off their credit. This can be a red flag.

(27)

CREDIT KARMA

• Provides a variety of scores, with information from

TransUnion & Equifax

• Credit score is updated weekly

• Track credit scores several

months before a big ticket item, like a mortgage.

creditkarma.com

(28)

W h o h a s t h e b e t t e r c r e d i t s c o r e ?

Diego

Balance $800

Limit $1000

Pays Entire

Balance

Angela

Balance $5,000

Limit $10,000

Pays Minimum

Payment

A n g e l a h a s t h e b e t t e r c r e d i t s c o r e !

(29)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(30)

R e v i e w y o u r g o a l s

BUILDING CREDIT

F i n a n c i a l S t a b i l i t y

(31)

C R E D I T C A R D S

S E C U R E D C R E D I T C A R D S

S E C U R E D L O A N S

R E T A I L / G A S C R E D I T

G E T A C O - S I G N E R

A D D E D A S A N

A U T H O R I Z E D U S E R

BUILD CREDIT

(32)

5. Check Report and Score Regularly

4. Pay entire balance to avoid finance charges.3. Use less than 1/3 of your available credit.

2. Consider making only 1 charge per month, such as an automatic bill-pay.

1. Have money in savings as a backup

T I P S F O R U S I N G

C R E D I T W I S E L Y

(33)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(34)

MYTH #1

“Closing a credit

card will hurt my

credit score.”

(35)

SARAH

• 3 maxed out credit cards

• Paid off the first card; decides to close it (to remove temptation.)

• 2 cards remain maxed out

KATIE

• 5 Open Accounts

• All balances are zero or close to zero

• Decides to close a newer account (to avoid the annual fee)

N E G A T I V E I M P A C T L I T T L E T O N O I M P A C T

(36)

MYTH #2

“Checking my

credit score will

hurt my credit

score”

(37)

Applying too often can hurt credit.

Checking is considered a ‘soft inquiry’.

W I L L N O T C H A N G E Y O U R S C O R E

(38)

1

Why is credit important?

2

What’s on your credit report?

3

How to obtain a copy of your credit report.

4

Credit scores & how they are calculated.

5

How to build / rebuild credit.

6

Common credit myths.

(39)

is a nationwide non-profit that provides financial education and tools for people to lead financially healthy lives.

G R E E N P A T H F I N A N C I A L W E L L N E S S

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