1. WHAT IS A CREDIT SCORE? A credit score is a number that helps a lender predict how likely an individual is to repay a loan, or make credit payments on time. A credit score is a number that changes as the elements in a credit report change. A credit score has broad use and impact. Your credit past is your credit future. FICO ® scores, one of the most common credit scoring systems, vary between 350 and 850. (700+ is “good”) Slide 1 – What Is a Credit Score? Lesson Reference: Credit, Activity 2 – Overhead 1 1

2. WHAT MAKES UP A TYPICAL CREDIT SCORE? Slide 2 – What Makes Up a Typical Credit Score? Lesson Reference: Credit, Activity 2 – Overhead 2 2 Source: Fair Isaac and Consumer Federation of America, 2005

3. WHAT IS NOT IN A CREDIT SCORE? Race Age Your salary, occupation, title, employer, date employed or employment history. Where you live. Any interest rate being charged on a particular credit card or other account.

4. SAMPLE CREDIT REPORT 4 Slide 3 – Sample Credit Report Lesson Reference: Credit, Activity 4 – Handout 2

5. How good credit scoring helps you People can get loans faster Credit decisions are fairer Credit “mistakes” count for less (new responsibility outweighs past problems) More credit is available Interest rates are lower overall

6. How to Fix a Credit Score & Maintain Good Credit Pay your bills on time!! Apply for and open new credit accounts only as needed Be aware that paying off a collection account will not remove it from your credit report (it will haunt you for SEVEN YEARS) If you have missed payments, get current and stay current

7. Slide 1 – Debt-to-Income Thermometer Lesson Reference: Credit, Activity 4 – Overhead 1 DEBT-TO-INCOME THERMOMETER 7

8. QUESTIONS TO ASK WHEN APPLYING FOR CREDIT 1.What is the annual fee? 2.What is the annual percentage rate (APR)? 3.What is the minimum payment required each month? 4.Is there a grace period? 5.Are there other fees associated with the credit, such as minimum finance charges? 6.What is the credit limit? 7.What are the penalties for late or missed payments? 8.What are the terms and conditions of the credit? What else is included in the fine print? Slide 6 – Questions to Ask Lesson Reference: Credit, Activity 3 – Handout 5 8

9. Slide 3 – What to Do Lesson Reference: Credit, Activity 7 – Overhead 2 WHAT TO DO IF YOUR IDENTITY HAS BEEN STOLEN If you think your identity has been stolen, take the following steps: 9 Contact the three major credit bureaus (Equifax, Experian, and Trans Union). Close accounts. Contact all creditors involved. File a police report. Keep a record of your contacts.

10. NEW PROVISIONS OF THE BANKRUPTCY LAW A test to determine eligibility to file bankruptcy Determining what you can afford to pay Tougher homestead exemptions Lawyer liability Credit counseling and money management New debt may not be discharged. Quicker collections process Slide 2 – Provisions of the Bankruptcy Law Lesson Reference: Credit, Activity 10 – Handout 1 10

11. THINGS TO CONSIDER BEFORE FILING FOR BANKRUPTCY A bankruptcy filing could determine whether or not you get a job. Your insurance rates could rise. You may find it difficult to rent an apartment or qualify for a home loan. Bankruptcies stay on your credit report for 10 years. Bankruptcy can lower your credit score. Slide 3 – Things to Consider Lesson Reference: Credit, Activity 10 – Overhead 2 11