UNDERSTANDING YOUR CREDIT SCORE

1
UNDERSTANDING YOUR CREDIT SCORE
2

• Whether you realize it or not, your credit score
  is a very important aspect of your financial
  status. It can mean the difference between
  getting a loan and not getting a loan, and it can
  also affect the interest rate. Many of us do not
  understand how a credit score is calculated, or
  more importantly how, if your credit score is
  less than perfect, we can improve it.

3

• Credit Scores range from 300 850
• A good score is 700 or better
• A bad score is below 600
• Your score can affect a variety of things

4
WH0 LOOKS AT YOUR SCORE

• Potential Lenders- Score determines interest rate
• Landlords
• Insurance companies
• Employers
• Any government agency

5
HOW YOUR CREDIT SCORE IS BROKEN DOWN

• 35Payment History More weight is based on
  current pay history. Ex. 40 of credit weight
  consists of payment history over the past 12
  months, 30 for 13-24 months, 20 for 25-36
  months, and 10 in excess of 36 months.
• 30Credit Capacity A members score will be
  higher the lower a members debt level is compared
  to available credit.
• 15Length of Credit The more years with credit
  history the better.
• 10Accumulation of debt in the last 12-18
  months, especially the number of inquiries made
  and opening dates.
• 10Credit mix Installment debt raises scores
  while revolving debt will lower a score. Also,
  the higher number of finance company loans, the
  lower the score.

6
ACTIONS THAT HURT YOUR SCORE

• Missing payments
• Credit cards at maximum limit. Keep balances
  below 75 of available credit
• Shopping for credit excessively
• Opening up numerous accounts in a short period of
  time
• Having more revolving loans
• Borrowing from finance companies

7
BEST WAYS TO IMPROVE YOUR SCORE

• Pay down credit cards
• Do not close all of your credit cards
• Continue to make payments on time
• Slow down on opening new accounts
• Acquire a solid credit history
• Move revolving debt to installment debt

8
HOW FAST DOES MY SCORE CHANGE?

• Your score can change on a monthly basis
• In a three month period only 1 person in 4
• Has a 20 point or more change
• Bankruptcy or late payment lower your score
  quickly
• Inquires lower your score by around 5 points
• Check your score every 6-12 months

9
HOW CAN I GET MY SCORE?

• If you are turned down for credit
• Equifax- www.equifax.com
• www.myfico.com

10
MANAGING DEBT

• Assess your situation
• Understand your spending
• Create a budget
• Reduce your expenses
• Find a low-cost credit card (average family has
  7000.00 in credit card debt, pay out 1000.00
  per year in interest
• Consider consolidating your bills
• Talk to a debt Counselor
• Check on your credit

11
WARNING SIGNS OF DEBT

• You dont have any savings
• Making minimum payments on credit cards
• You have 3 or more major credit cards
• Near credit limit
• Taking cash advances to pay bills
• Dont know how much debt you have
• Declined for credit

12
LENDERS LOOK AT YOUR DEBT

• Debt to income ratio- 40
• Large scale debt such as your home should be no
  more than 20 of your income
• Credit
• Collateral
• Purpose

13

• Stop Incurring Debt
• Dont expect Miracles
• Plan for the future!!!!!!!!!!

14
SAVING MONEY

• Experts recommend saving 3-6 month salary
• Save at least 10 for retirement
• Set savings goals

15
ACCOUNTS YOU CAN USE TO SAVE

• Savings account
• Money Markets
• Christmas Clubs
• Vacation Clubs
• Pay-roll deduction or direct deposit
• Do not use checking accounts

16
Retirement Savings

• 401k Plan
• IRAs- Roth and Traditional
• Annuity

17
THANK YOU FOR ATTENDING