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Take Charge of Your Money Class 3: Credit & Debt

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Presentation on theme: "Take Charge of Your Money Class 3: Credit & Debt"— Presentation transcript:

1 Take Charge of Your Money Class 3: Credit & Debt
Heather Greenwood Extension Agent Virginia Cooperative Extension Many slides adapted from Financial Volunteer Training CD

2 Topics of the day What is credit? What is your credit limit?
What is a credit report? Establish a credit history. Correcting credit report errors. Improving your credit record.

3 What is Credit? Types of Credit Advantages of credit
Sales credit Loans Credit cards Service credit Advantages of credit Disadvantages of credit

4 What is your credit limit?
How much is too much credit? How much are you comfortable with? What do financial professionals say is a “safe” level? Credit limit formula Take home pay Basic living expenses 30% of discretionary funds

5 Applying for & managing credit
Creditor guidelines What information can creditors request? What information can creditors not request? When can creditors deny credit? Women and credit Separation and divorce Widowhood

6 Credit reports Record of: Does not include: credit repayment
total debt Does not include: race religion political preference criminal record unrelated to credit medical history

7 What’s in my credit report?
Identifying information current/previous addresses, phone number , SSN, birth date, employer Credit information all accounts, payment history, loan balance/limit Public record information bankruptcy, foreclosure, tax liens, judgements Inquiries

8 Establishing a Credit Record
Pay bills and rent on time Use layaway plans or 90 day, interest-free plans Consider a limited-use credit card (not right for all people) Establish and use a checking account Open a savings account Review credit file

9 Non-traditional Credit Report
Copies of bills/cancelled checks Landlord/utility letter indicating timely payment history Keep track for at least 2 years Consider a low balance credit card If married, have accounts in own name

10 Ordering a Credit Report
Equifax Experian 888-EXPERIAN www. experian.com Transunion

11 Common Errors Someone else’s information is on your report
Closed account still indicates it is open Accounts you did not open are listed Old information has not been deleted

12 Correcting Errors Follow instructions included with the credit report
Credit bureau will investigate Within 30 days, the bureau must find the information to be correct or incorrect Correct, information will remain Incorrect, information is removed

13 Correcting Errors Credit bureau may request additional information
canceled check, payment information, letter from creditor Contact creditor directly 100 word explanation if information is correct but has extenuating circumstances

14 Improving Credit Develop a budget for all household expenses
Pay bills on time every month Use a bill calendar Make arrangements if you are out of town Automatic payments from checking account (MUST track carefully)

15 Improving Credit (cont.)
Pay loans first Pay off credit cards every month (credit cards are loans) Pay more than minimum due Do not max the credit limit Only apply for credit you need Choose a low interest/no annual fee card

16 Improving Credit (cont.)
Use credit card to establish good credit Reduce expenses and increase income Keep track of bills and past-due notices Shred ALL credit card offers as soon as they arrive

17 How long will this stay on my report?
Bankruptcy 7-10 years Foreclosure 7 years Late payments 2-7 years Judgements Collection accounts 2-7 years Repossession 7 years Unpaid delinquent accounts indefinitely

18 Questions? For more information, contact: Heather Greenwood
Virginia Cooperative Extension ext. 13

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