1. How to use credit responsibly and make it work for you

2. Credit Myths and Mistakes  Myth: You have to make a lot of money to have good credit  Reality: Your credit score is an indicator of your financial responsibility  People with a large income can have bad credit just as easily as people who have smaller incomes  Myth: A line of credit is just like money  Reality: A line of credit is a charge against future income  As much as possible credit should only be used when you have the money to pay for an item while LIVING WITHIN YOUR MEANS!!!!!  Myth: There are no financial consequences to having bad credit  Reality: There are significant long-term costs to having bad credit

3. The Cost of Bad Credit Credit Cards  Credit Score760660  Interest Rate9.919.9  Annual Interest Costs$792$1592  Lifetime Interest Costs$39,600$79,600  Cost of Bad Credit$40,000

4. The Cost of Bad Credit $20,000 Car Loan  Credit Score760660  Interest Rate4.25%8.25%  Monthly Payment$371$408  Interest Cost $2,235$4475  Lifetime Interest Paid $17,880$35,804 Note: This assumes an average life span of 7 years for each car

5. Hidden Costs of Bad Credit  Higher percentage of income going to lenders  Less money available for retirement investments  Less money available for vacations  Less money available for kids college education  More stress and anxiety in your daily life  Higher housing rental costs  Higher security deposits  Application rejection—less choice of where you live  Higher insurance premiums  Bad credit can cause insurance premiums to be 20 percent to 30 percent higher.

6. Where Does a Credit Score Come From Experian, Transunion and Equifax are the three credit reporting agencies in the United States Don’t be taken in by credit reporting scams from “other” agencies or by credit monitoring companies that promise free access to your credit report. Make sure you are getting a FICO 8 score (Experian only sells credit reports to lenders) If you are making a major purchase (car or home) order a credit report for yourself to facilitate possible repairs and to prevent a lender from using a fake credit score to determine your interest rate

7. Components of a Credit Score  Payment History—35%  How much you owe—30%  How long you have had credit—15%  Your last application for credit—10%  The types of credit you use—10%

8. Basic Credit Building  Start Small  Get a low credit-limit card ($500-$1000)  Limit your purchases to items for which you already have cash available while LIVING WITHIN YOUR MEANS!!  Completely pay-off your balance each month on-time—no late payments  Alternate plan: Make 3-4 smaller payments during the billing period to pay off the balance instead of paying it off all at once  Establish payment history through other means  car insurance, cell phone plans ect  Make all payments on-time  Do not increase the amount you charge on a credit card when the credit limit is increased  As you make regular payments your original limit will increase from $500-$1000 to $3000-$5000. This is only more potential debt.

9. Maintaining Your Credit  Carefully add other credit accounts  You don’t need more than three credit cards to keep a good credit score  Don’t max out or charge a high percentage of your credit limit on any card  Continue to LIVE WITHIN YOUR MEANS and pay for everything on-time.  When you Are financially prepared, take out a sensible car loan  Know how much car you can afford and stay within your budget  New cars lose about 20% of their value after they leave to dealership and will continue to depreciate 7%-9% annually  The best value is usually a used car approximately 1-2 years old

10. What Does This Do For Me?  Reduces the cost of credit card use and other types of borrowing  Allows you to keep more of your money to build up your personal wealth  Gives you greater flexibility in an emergency  Reduces your stress related to financial planning