Understanding Your Credit Score Central Piedmont Community College TRiO Student Support Services Financial Literacy Series Workshop

 What is your credit IQ?  What is a FICO score?  What factors impact a FICO score?  What happens when you have bad credit?  What are some ways to improve your credit score?  What are some free and simple ways to protect your credit rating? Purpose and Objectives

 Do you know fact from fiction about your credit?  This quiz will determine how much you know about your credit and show just how high your credit IQ is. Credit Quiz by Bert Cox

 1.____What’s the single biggest factor in establishing good credit? a. owing lots of money b. paying your bills on time c. having a large income  2.____ Buying a new car with financing will increase/decrease your ability to buy a new house? a. increase b. decrease Credit Quiz (cont.) B B

 3.____ Mortgage companies prefer ____ line(s) of credit to evaluate credit worthiness? a. 0 b. 1 c. 3  4.____ Having credit cards with high balances and making the payments on time will increase/decrease your credit score? a. increase b. decrease Credit Quiz (cont.) C B

 5.____ There are (is) ____ credit bureau(s)? a. 1 b. 3 c. 7  6.____ The different credit bureaus use the same/different algorithms to compute your credit score a. same b. different Credit Quiz (cont.) B A

 7.____ Late payments appear on your credit report for __ years? a. 1 b. 2 c. 3  8.____ Bankruptcy appears on your credit report for __ years? a. 5 b. 7 c. 10 d. forever Credit Quiz (cont.) B B / C

 9.____ Applying for credit will affect your credit score? a. true b. false  10.____ If an account is placed for collection, it is removed from your credit report once it’s paid off. a. true b. false Credit Quiz (cont.) A B

 11.____ Your credit score is a measure of ___________? a. your risk as a borrower b. your financial health c. your net worth d. all of the above Credit Quiz (cont.) A

 1. B. Paying your bills when due is the single biggest factor in achieving a high credit score.  2. B decrease.  3. C. three credit lines or more is preferred but not absolutely necessary.  4. B. High debts reduce your credit score.  5. B 3 credit bureaus.  6. A. The 3 credit bureaus all use the same method to calculate score; scores still vary due to differing databases.  7. B 2 years.  8. B /C chapter 13 appears for seven years and chapter 7 for ten years.  9. A. applying for credit reduces your credit score.  10. B. false.  11. A. creditors view your score in terms of risk – the lower the score, the greater the risk, and the higher the interest rate and down payment required. Credit Quiz Results

 A FICO score is also called a credit score?  It ranges from 300 to 800 based on your credit rating.  A good FICO score is critical to accessing wealth.  A good FICO score can make the difference in getting approved for a loan for a house, car, a credit card and major life events. What is your FICO score?

 Payment history  Do you make payments on time?  Late payments lower your score  Amounts owed  What is your debt to income ratio?  Length of credit history  New credit  Types of credit used  Credit Inquiries What factors impact your FICO score?

What happens when you have bad credit?

 1. Pay Your Bills on Time  2. Don’t Bounce Checks  3. Start Small  4. Visit Local Lenders  5. Apply for a Secured Credit Card  6. Apply for a Small Loan or Credit Card with a Co-Signer  7. Review Your Credit Report Once a year  8. Review Your Credit Report a Few Months Before Requesting a Major Loan  9. Avoid Letting Accounts be Turned Over to a Collection Agency  10. Avoid Having Judgments Filed Against You  11. When Denied Credit, Review Your Credit Report  12. Try to Avoid Constantly Switching Employers  13. Try to Avoid Frequent Changes in Residence  14. Work to Increase Your Income  15. Work to Decrease Your Debt What are some ways to improve your credit score?

 Order your credit report for free.  Check out free sites and resources for credit information.  Ask your financial institution for assistance.  Get a security freeze.  Use a credit score estimator.  Set up fraud alerts on your accounts.  Pay for a credit monitoring service. Protect your Credit Rating

 Be educated about your credit rating.  Find out what information and resources are available to help you remain credit worthy.  Get a FREE annual copy of your credit report from each of the three credit bureaus and read and compare them for accuracy.  Visit  If something is wrong on your credit report, dispute it.  Protect your identity. Recommendations

 Federal Student Aid ( or FED-AIDwww.FederalStudentAid.ed.gov  MyMoney.gov ( or Moneywww.mymoney.gov  Federal Trade Commission’s Consumer Protection (  FDIC Consumer News (  The Bad Credit Hotel (  Navigating Your Financial Future (  360 Degrees of Financial Literacy (  College Savings Plan Network ( The following are resources for students and families regarding federal financial education materials, money and credit management, and fraud prevention: Additional Resources

 Developed by Annette Teasdell, Summer 2009 Counselor, Student Support Services, as part of the Financial Literacy Workshop Series.  Information used in this presentation was taken in part from the resources for improving your finances on the previous page and from:  The Credit Quiz, Copyright © 2006 Bert Cox. All rights reserved. As Published in “Concord Area Professionals”. Acknowledgements

Thank You!

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