1. CREDIT HISTORY & SCORES

2. CREDIT REPORTS  3 Credit Bureaus receive and maintain information on consumers: Experian TransUnion Equifax  Get a copy of your credit report from www.anualcreditreport.com www.anualcreditreport.com  One free copy per year from each credit bureau.

3. Reports contain 4 categories of information  Identification and Employment  Payment History  Inquiries  Public Records  Information stays on your report for 7 years.

4. What is not in your credit report?  checking or savings accounts  bankruptcies that are more than 10 years old,  charged-off or debts placed for collection that are more than seven years old  gender, ethnicity, religion, political affiliation, medical history, or criminal records.  your credit score.

5. Building bad credit history  Look at the sample credit report. Identify 5 items that suggest this person is a high risk borrower.

6. Building good credit history  What can this person do to improve her credit?

7. CREDIT SCORES A credit score = number used by a lender decide if you qualify for credit/loans It is used to determine the rates and terms of your loans.

8. Why is credit scoring used? It is fast Scores are based on data and statistics They are unbiased and nonjudgmental It is a reliable tool to indicate risk

9. Credit Score Range Your score ranges from 300 to 850, but the majority of scores fall within the 600s and 700s. Higher scores indicate a lower credit risk.

10. The breakdown

11. How your score impacts your APR

12. How to improve your score Keep account balances low Pay bills on time Don’t open credit cards/accounts you don’t need Have credit cards, but manage them responsibly Closing an account doesn’t make it go away

13. Strategies for Debt If you have gotten yourself in debt trouble…. Develop a savings of $300 before paying down debt (continue to make minimum payments) Make a chart with cards, limits, amounts, and APR’s Attack the card w/ highest APR - pay minimum on others, pay extra on highest APR Pay it off, close it if applicable, move on to the next highest APR.

14. Bankruptcy Chapter 7 “fresh start” Wipes out debt (not child support, student loans, criminal restitution, court fines) Qualify: must show income less than the median income of WA. In 2010 it was $49,124. Must demonstrate that you can’t pay the debt (file budget sheet)

15. Bankruptcy Chapter 13 Filed by people who can pay back a part of the debt but want to protect their assets Make a Good Faith plan that involves payments that last 36 to 60 months. Must commit disposable income to pay back debts.