MAINTAINING A GOOD CREDIT RATING

CLAUSES AND CONTRACTS Contract - read what you sign Preapproved - the bank will allow you to buy the item  Only you know if you can afford it Garnishment - through a court order some of your wages are withheld to pay debts Balloon Clause - smaller payments at the beginning then 1 big payment Acceleration Clause - if you miss one payment then the whole balance is due  They can repossess item if you do not pay

HOW TO JUDGE YOUR SPENDING Income after taxes spent  20% Max credit payments (auto loan, credit cards)  35% max – on housing Keep credit cost down (Look for…)  Short payment period  Large down payment  Lowest interest rate

PROTECTING CREDIT Be careful with credit, debit, and ATM cards; as well as your account and personal identification numbers. Carry only the cards you expect to use (keep others in a safe place)  If cards are lost/stolen notify companies ASAP Do not carry around your SS card Be cautious about giving out your account numbers (especially when someone calls you)

PROTECTING CREDIT CONTINUED Compare your bills with receipts Destroy old documents with account numbers and personal information on it. If you disagree with a bill amount contact company ASAP  You are responsible for notifying your creditor in writing within 60 days  Your letter should include your name, account number, and amount or bill item in questioned, with reason why.

COMMON REASONS FOR DENYING CREDIT Too little time in current job or at current residence Too much outstanding debt Unreasonable purpose for requesting credit Cosigner cannot take on additional debt liability Errors on applicant’s credit report Strict creditor’s standards Creditworthiness must be determined on the basis of criteria that relate to your ability and willingness to repay debt.

REASONS CREDIT CANNOT BE DENIED EQUAL CREDIT OPPORTUNITY ACT Gender Marital status Race Religion Nation origin Age Dependence on income from public assistance If you are denied credit, the creditor must provide you with a written statement of the action and your rights, as well as the reason for denial or how to request the reason.

WHAT DOES IT COST TO GET YOUR CREDIT SCORE? To obtain a credit score, it costs a small fee - $14 - $15 Many services offer a monthly score update that you must pay for. Is freecreditreport.com really free?  The company offers a free credit report for signing up for a monthly credit score service you must pay for!

IMPROVING POOR CREDIT Face up to the problem.  contact your creditors to see if they will set up a new payment schedule that you can maintain Immediately stop purchasing with credit. Consider consolidating debts. Contact a credit counseling organization. Don't expect miracles.  Don't believe companies that promise to fix a poor credit rating quickly.  The only way to improve a credit record is to let time pass and establish a record of on- time payment.

DEBIT COUNSELING STRATEGIES TO REDUCE DEBT Contact Consumer Credit Counseling Negotiate with Creditors Reduce other expenses File for chapter 13 or 7 bankruptcy

TRUTH IN LENDING ACT All banks have to calculate interest in the same way (APR) Ex. Each month the min balance of 10% is paid on a credit card that has an interest rate of 20% per year. PurchasesBalanceInterestAmt owedpayment