BALANCING LIFE’S ISSUES, INC.

Everything You Need to Know About Your Credit

Fast Amazing Facts

Between 1989 and 2001 credit tripled in America

54% paid their bills in full23% pay late fees59% know their credit scores36% do not have any idea what they are

paying in interest

It is a threat to your financial securityIt is a threat to your financial security

Creates a hole that can be hard to dig out off

Can quickly go from bad to worse (prob’s don’t fix themselves)

Increases the cost of borrowing, causing us to spend more than we have to

Can ruin a household budget

What Can a Bad Credit Score Mean?

How Long Will It Take Your To Pay-off Your Balance?

Current balance: $5,000Interest rate: 14%Minimum payment: $108.33 (1% + int.)Pay-off period: 264 months!

Interest expense: $5,333!!

Why do I need a Good Credit Score?

A better credit score means it will cost you less to borrow

Necessary to buy a new home, finance a business venture, a new car

Fund higher educationOpens up new opportunitiesPrepares you for “what if” situationsFollow you for your whole lifeCan be used by employers in certain

situations

What is FICO?

Fair Isaac CompanyDeveloped custom software back in the

1980’sPrior to Fair Isaac credit was given out

randomly, secretively and there was often discrimanation

Set statistical equation to make it as fair as possible

What goes into my FICO score?

Based on information provided by your lenders: 35% Payment history

Single easiest way to raise your scores is to pay your bills on time

30% Amount Owed How much outstanding debt do you have

15% How long have you had your cards10% New credit10% How often do you use your credit cards

How do I get my report?

What are my lenders saying about me?

Go to www.annualcreditreport.comGet 1 free report annually from each agency3 credit reporting agencies: Experian,

Transunion, EquifaxStagger your requests (one every 4 months)

Once you get your report . . .

Check for mistakes! 25% of all credit reports have mistakes that need to

be fixed 79% have careless errors (misspellings of names or

wrong addresses that need to be fixed)

Report errors to the credit bureau and the lender filing the bad info disputes must be responded to within 30 days corrections will probably take longer

Work on improving your report immediately

How do I get my score?

It costs money to get your scores… your credit reports are free

www.myficoscore.com costs $15.95/ yearScores range from 300 to 850 (best)

Debt Management Programs

Help is available with debt counselorsDMP can help negotiate with lenders,

streamline your payments, remove stressFind reputable, qualified counselors through

National Foundation for Credit Counseling (www.NFCC.org)

Debtors anonymous is a not-for-profit organization that helps get your spending under control (www.debtorsanonymous.org)

Take Aways

Pay your bills on timeNever use all your credit… Lenders look at

how much you have left overApply for loans together.. So a new car and

home equityClosing and Opening accounts can hurt your

FICO scoreTeach your children as young as possible to

be financially literate

More Take Aways

When you can, pay off the balance in full.If you are holding money in savings while racking

up credit card balances at a higher rate, you are losing money.

Pay more than the minimumSeek help – debt management programsDebtors anonymous is a not-for-profit

organization that helps get your spending under control

Make a list of all your credit cardsControl your spending and live below your means