MoneyWi$e Webinar: Good Credit What is credit?  Ability to borrow money or obtain goods.  Your promise to pay the original cost later or over time plus interest.

MoneyWi$e Webinar: Good Credit Why do you need credit?  Buying a home or renting an apartment  Getting a job  Getting phone service  Finance an automobile  Spreading out payments for expensive items  Qualify for insurance  Get a loan  Obtain a credit card

MoneyWi$e Webinar: Good Credit Bad credit  Unreliable in paying bills  Bills are paid late  Debts are abandoned  Filed for bankruptcy Good vs. bad credit  Good credit  Reliable in paying bills  Companies willing to extend credit

MoneyWi$e Webinar: Good Credit How can I get credit?  Establish an account –Ask a local company –Find a co-signer –Get a secured credit card  Use it responsibly for a year or two –Pay all bills promptly –Don’t bounce checks

MoneyWi$e Webinar: Good Credit Why is credit denied?  No credit history  Too much outstanding credit  Credit not handled responsibly in the past

MoneyWi$e Webinar: Good Credit What is a credit report?  Record your loans, credit cards, payments and outstanding debts  ‘Credit Reporting Bureaus’ –Equifax –TransUnion –Experian

MoneyWi$e Webinar: Good Credit What’s on your credit report?  Current and past payment information –On-time and late payments  Outstanding balances  Public records  Names of companies who have asked a copy of your report

MoneyWi$e Webinar: Good Credit Who can get a copy of the report?  You  Only those who can prove a legitimate need –Banks –Credit card companies –Landlords or real estate companies –Employers

MoneyWi$e Webinar: Good Credit The cost for your credit report  One free copy from each bureau each year.  Your credit report is also free if you’ve been denied credit in the past 60 days, based on your credit report.  Otherwise, the cost is approximately $12.

MoneyWi$e Webinar: Rebuilding Good Credit If a collection agency calls…  Respond immediately if you don’t agree that you owe money.  Ask the collection agency to prove that you owe the money. –A collection agency can’t try to collect the debt while its validity is being checked out.

MoneyWi$e Webinar: Rebuilding Good Credit Ways to rebuild good credit  Pay your existing credit accounts on time  Apply for a credit card or small loan  Find a co-signer  Get a secured credit card

MoneyWi$e Webinar: Rebuilding Good Credit Advantages of Credit Cards  A safe alternative to cash  Builds a good credit history  Bails you out of emergencies  Gives you time to pay

MoneyWi$e Webinar: Rebuilding Good Credit Disadvantages of Credit Cards  Carrying a balance  Pay more for items than you would with cash  Tempting

MoneyWi$e Webinar: Rebuilding Good Credit Credit Card Facts  Credit limit –based on your ability to handle debt.  Paying the minimum monthly payment -the LEAST amount you can pay to keep the card active. If you pay less, your card will be deactivated (turned off). - Gains fees

MoneyWi$e Webinar: Rebuilding Good Credit Credit Card Facts  Grace period –Time in which you will receive no finance charges if you pay your bill in full.  Late fees –If you don’t pay your bill by the due date.  Interest rates- APR –you will be charged interest whenever you don’t pay your bill in full. –Based on your credit history

MoneyWi$e Webinar: Rebuilding Good Credit. Secured Credit Secured credit means that the product you purchased, serves as collateral to guarantee the debt. Secured credit cards you put money down as collateral.

MoneyWi$e Webinar: Rebuilding Good Credit Unsecured Credit Based on your promise and signature to repay the debt without committing collateral. Credit cards can be either secured or unsecured. Most credit cards are unsecured.