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UNDERSTANDING YOUR CREDIT SCORE

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Check on your credit. WARNING SIGNS OF DEBT. You don't have any savings ... Do not use checking accounts. Retirement Savings. 401k Plan. IRA's- Roth and Traditional ... – PowerPoint PPT presentation

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Title: 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
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