1. Stock Market Analysis and Personal Finance Mr. Bernstein Building and Protecting Credit March 13-14, 2013

2. Stock Market Analysis & Personal Finance Mr. Bernstein The 5 Cs of Credit C haracter – Local lenders may know you or your cosigners C apacity – What is your current debt payment/income ratio? C apital – What is your current debt/asset ratio? C ollateral C redit History 2

3. Stock Market Analysis & Personal Finance Mr. Bernstein Building Credit 3 If youve never had a credit card or a loan, your credit history is a blank slate. Your credit history, as documented on your credit report, is a record of how responsibly youve repaid money youve borrowed.credit report

4. Stock Market Analysis & Personal Finance Mr. Bernstein Building Credit 1. Start with a secure credit card Collateralized credit card activity is reported to the credit bureaus 2. VERY IMPORTANT: Only charge what you can pay in full You are essentially receiving a no-interest loan…the retailer pays the bank, not you… keep it that way! 4

5. Stock Market Analysis & Personal Finance Mr. Bernstein Building Credit 3. Pay On Time Watch that grace period closely! Even one late payment hurts your credit score, especially when you have little history 4. Avoid Applying for Multiple Cards Every application produces a small hit to your credit score…Prove you can handle one card first 5

6. Stock Market Analysis & Personal Finance Mr. Bernstein Building Credit 5. Check Your Progress Federal law requires credit reporting firms to provide consumers free credit reports (1 per year per bureau) A modest fee is typically required to receive an actual credit score http://www.annualcreditreport.comhttp://www.annualcreditreport.com is sponsored by the three largest credit reporting firms, Equifax, TransUnion and Experian Checking your report does not your score but a check from lenders does create a small hit to your score… Why? 6

7. Stock Market Analysis & Personal Finance Mr. Bernstein Building Credit 6. After One Year, Apply for Unsecured Card The unsecured card will likely offer a higher credit limit and better pricing Eventually add a card from a retailer Continue to pay in full each month 7

8. Stock Market Analysis & Personal Finance Mr. Bernstein Credit Scores It is illegal for lenders to deny credit if you are creditworthy There are deadlines for requesting credit scores and challenging loan denials Credit file typically goes back seven years (unless loan is for larger sums of money) Bankruptcy information goes back ten years Employers may check Credit Scores as well as lenders Income is not considered… Why? 8

9. Stock Market Analysis & Personal Finance Mr. Bernstein Cosigning You are essentially doing what the lender does not want to do – accepting the credit risk of another They get paid for taking credit risk and dont want this one Think long and hard before cosigning – how much cash are you willing to pay to avoid damaging a relationship? 9

10. Stock Market Analysis & Personal Finance Mr. Bernstein Identity Theft Check your monthly statements Notify creditor immediately of unauthorized card use New York Times collection of identity theft stories: http://topics.nytimes.com/your-money/credit/identity- theft/index.html?offset=0&s=newest 10