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Personal Money Management
- 2. www.MoneyManagement.org 2www.CreditEducation.org Who we are Money Management International is a nonprofit whose mission is to improve lives through financial education through: Education Credit Counseling Debt Management Housing programs
- 3. www.MoneyManagement.org Small Business Owners • 45% of the EWA clients own small businesses 3www.CreditEducation.org
- 4. www.MoneyManagement.org 4www.CreditEducation.org What we will discuss Upon completion of this program, you will have an understanding of how to: The use of a credit report Contents Secure your free report Dispute items
- 5. www.MoneyManagement.org 5www.CreditEducation.org What we will discuss You will also know: The product of scoring What determines the score Ideal scores Improve your score Purchase a score What you need to have in place for business financing
- 6. www.MoneyManagement.org 6www.CreditEducation.org How long has issuing credit been in existence? Since the turn of the century 500 years Over 3,000 years
- 7. www.MoneyManagement.org 7www.CreditEducation.org Overview of credit reporting • Merchant credit • WWII shifted population to the cities • Merchants shared account information • Credit reporting industry got its start
- 8. www.MoneyManagement.org 8www.CreditEducation.org What is a credit report? A credit report is a record of how an individual has applied for, received and repaid credit obligations in the past.
- 9. www.MoneyManagement.org 9www.CreditEducation.org Where do credit reporting agencies obtain information? ConsumersCreditors Public Records Internal Inquiries Consumer Statements Collection AccountsExternal Inquiries
- 10. www.MoneyManagement.org 10www.CreditEducation.org Myth Buster Myth My credit report contains information about my recent divorce. TRUE FALSE
- 11. www.MoneyManagement.org 11www.CreditEducation.org What information is not in a credit report? • Race • Religion • Medical history • Political affiliation • Criminal records • Checking or savings account information • Any information that is not credit related
- 12. www.MoneyManagement.org 12www.CreditEducation.org How to obtain a credit report Be prepared to provide following information Full name Date of birth Social security number Current and previous addresses Daytime phone number Photocopy of letter of denial Photocopy of driver’s license or other Photo ID
- 13. www.MoneyManagement.org 13www.CreditEducation.org Free credit reports • Internet: www.annualcreditreport.com • Telephone: 877-322-8228 • Mail: Annual Credit Report Request Service • Been denied credit • Unemployed and looking for work • On public assistance
- 14. www.MoneyManagement.org 14www.CreditEducation.org Myth Buster Myth Business partners will share the same credit file. TRUE FALSE
- 15. www.MoneyManagement.org 15www.CreditEducation.org Credit reporting Agencies • Experian • Equifax • TransUnion • Innovis
- 16. www.MoneyManagement.org 16www.CreditEducation.org Myth Buster Myth Anyone who wants to can request my credit report TRUE FALSE
- 17. www.MoneyManagement.org 17www.CreditEducation.org Besides for credit, when can a credit report be viewed? Employment Insurance Professional License Court order or Federal Subpoena Collection Purposes IRS for a repayment plan
- 18. www.MoneyManagement.org 18www.CreditEducation.org Myth Buster Myth TRUE FALSE I am a co-signor with my partner, and if she defaults on the note , it will show up on my credit report.
- 19. www.MoneyManagement.org 19www.CreditEducation.org How credit reports are the same The format may be different but all contain: • Personal information • Alerts and validations • Account information • Collection agency account information • Public record information • Inquiries – internal/external • Creditor information list
- 20. www.MoneyManagement.org 20www.CreditEducation.org How credit reports are different • Not all creditors report to all agencies • Timing • Timing of updated information not necessarily equal
- 21. www.MoneyManagement.org 21www.CreditEducation.org Myth Buster Myth I don’t need to check my report because I pay my bills on time. TRUE FALSE
- 22. www.MoneyManagement.org 22www.CreditEducation.org Reviewing credit report for errors • Check your personal information such as name and social security number • Verify your account status information • Check your active account dates • Look for out of date information
- 23. www.MoneyManagement.org 23www.CreditEducation.org Retention standards Monthly payment activity 2 years Inquiries 2 years Civil Judgments 7 years from filing or until satisfied Tax liens 7 years from filing or until satisfied Trade lines and closed accounts 7 years from date of last activity Chapter 7 bankruptcy 10 years from filing date Chapter 13 bankruptcy 7 years from filing date/10 years if payments not paid Collection accounts 7 years from delinquency Foreclosure 7 years from delinquency Unpaid tax liens Indefinitely from date reported Charged off accounts 7 years from original delinquency Closed accounts 10 years from date closed
- 24. www.MoneyManagement.org 24www.CreditEducation.org Myth Buster Myth It is up to the credit reporting agency to verify information before they put it on my report. TRUE FALSE
- 25. www.MoneyManagement.org 25www.CreditEducation.org Dispute process • Complete Dispute Form or write letter documenting errors • Mail form to bureau reporting error • Or contact creditors directly • Contact Federal Trade Commission if unable to resolve dispute • Put 100 word personal statement on credit report
- 26. www.MoneyManagement.org 26www.CreditEducation.org What is credit scoring? Credit scoring is a number that creditors use to assess the likelihood that consumers will repay their debts and make payments on time. No score-850 FICO
- 27. www.MoneyManagement.org 27www.CreditEducation.org How is a score determined? Types of Credit in Use 10% Payment History 35% Ow ed to Creditors 30% Length of Credit History 15% Amount of New Credit 10% Payment History Owed to Creditors Length of Credit History Amount of New Credit Types of Credit in Use
- 28. www.MoneyManagement.org 28www.CreditEducation.org The benefits of credit scoring • Increase the speed of credit decisions • Assist lenders in making unbiased decisions • Credit is more available
- 29. www.MoneyManagement.org 29www.CreditEducation.org Myth Buster Myth You need a score above 700 to get a preferred interest rate. TRUE FALSE
- 30. www.MoneyManagement.org 30www.CreditEducation.org What is considered a good score? There is no one score cut-off used by all lenders, it is hard to say what a good score is outside the context of a particular lending decision. Understanding your fico core – Fair Issac Corporation
- 31. www.MoneyManagement.org 31www.CreditEducation.org Myth Buster Myth A credit repair company can clear up all my bad credit. TRUE FALSE
- 32. www.MoneyManagement.org 32www.CreditEducation.org How to maximize your score • Make timely payments every month • Use credit as a convenience • Do not open unnecessary new credit • Do not close unused accounts • Make sure your credit report is accurate • Use credit!
- 33. www.MoneyManagement.org Maximize Your Score • Clean up social media sites • Partner in business – should swap credit reports before diving into business together • If you have had some problems before, be patient 33www.CreditEducation.org
- 34. www.MoneyManagement.org 34www.CreditEducation.org How to get a credit score • www.myfico.com • www.Equifax.com • www.TransUnion.com • www.Experian.com • Msn – Money Tab CS Calculator
- 35. www.MoneyManagement.org 35www.CreditEducation.org Summary • Credit report contents • Review credit report annually • Dispute any errors • Maintain good credit
- 36. www.MoneyManagement.org 36www.CreditEducation.org Summary • Credit Scoring is accepted standard for issuing credit • Credit scores determine whether you can get credit and what interest rate you will pay • Having a good credit score makes your financial dealings easier and can save you money.
- 37. www.MoneyManagement.org 37www.CreditEducation.org Thank you for coming! Questions?