PF: Unit 7

prime credit score

good score 720+

most common deciding factors for credit applicant include

income, debt, and credit history

one thing secured credit card won't give you

is a loan. if need additional spending power for emergencies need unsecured credit card

credit score

is a portrait of someone's credit history made up of several factors, number placed on sace that helps prospective lenders evaluate whow likely you are to pay your debts which in turn determines kinds of loans can get

better car insurance rates (6 - 9 benefits of having good credit scores)

auto insurers use scores and with good credit pay less for insurance

subprime credit score

below near prime negative credit less than 660

get approved for higher limits (4 - 9 benefits of having good credit scores)

borrowing capacity based on income and credit score with good score banks willing to let you borrow more money because domonstrated will pay back on time

if want to find out if credit card company or loan service provider offers free credit card can either

call and ask them or check their websit

"free credit score" means

can get one free credit report once but if want the score gonna have to pay for it because that is how make their money

authorized user

can use credit card but not legally respobsible for paying bill

Two types of debt most common for millennials are

car and education debt at 41% each, not a suprise because as younger people are the most common types of debt will incur first, especially education one if gonna go to college most people going to have some sort of education debt

get a cell phone on contract with no security deposit (7 - 9 benefits of having good credit scores)

cell phone service providers might not give you contract for bad score with a good credit score avoid paying security deposit and may receive discounted purchase price on latest phones by signing a contract

4 main ways to get credit scores

check credit card/loan statements talk to a non-profit counselor use a credit score service buy a score

near prime credit score

close to prime 660-720

3 main US credit bureaus collect

credit information from bank, credit unions, credit card issuers, retailers, mortgage lenders, collection agencies, and public court records; all informationn from all sources compiled information into a credit report

payment history and actual debt account 65% of score because

credit score basically your borrowing power. If paid stuff on time and good ration total debt then that'll help your score because main components with score are debts and total history

Nationally 79.2% of adults were

current on all credit payment in the last year states tend to clump up with this

having bad/limited credit history:

doesn't mean can't get credit card

cosigner

doesn't use credit card but promises to pay off the debt if account holder doesn't. Legally respobsible for debt which is why anyone asked to cosign a loan/other credit account should think about responsibility very carefully before agreeing

credit report

extremely imporant because all of the information on it is what drives your credit score is a consolidation of your history and track record of paying bills over last 7-10 years shows open and closed accounts, any late payments, not late payments, all kinds of information and then information used to credit score when leders will use to evaluate which type of terms you can get on different types of products (mortgages, credit cards, insurance, and employment) latepayments, missing payments put on report which can affect credit score; large concern because if credit score decreases in future borrowing power decreases

unsecured credit card with good credit

generous but very selective and only with people with strong credit track reconds

when it comes to having a credit score, a thin file is NOT an assest to have when

go to get a loan, you don't have much history for bank to look at

more negotiating power (3 - 9 benefits of having good credit scores)

good credit score gives you leverage to negotiated lower interest rate on credit card or loan. Can take advantage of other offers received based on score

better chance for credit card and loan approval (2 - 9 benefits of having good credit scores)

good credit score increases change of being approved for new credit

secure credit card

good for rebuilding your credit required to place refundable security deposit when opening an account can deposit $200-$5000 and this amount represents your credit line the deposit minimizes risk for issuers and guarantees approval and impossible to spend more than can pay can add to deposit over time enabling you to increase credit line and gain spending power to book expensive things/buy expensive things besides the refundable security deposit indistinguishable from other credit cards as you have to make monthly payments and assessed interest if carry a balance also reports information to major credit bureaus each month deposit is required, very easy to get approved, low fees, control your credit line, impossible to overspend If use this card for credit building purposes, should be able to get unsecured after about 12-18 months of responsible use

student loan

good reason to borrow money if graduate, if educatioon leads to job with good salary, if loan payments are managable not good idea if borrow too much or the student never graduates repaying loans could be significant burden

bragging rights (9 - 9 benefits of having good credit scores)

good score something to feel good about keep doing what it takes to maintain good score

make sure taking right steps towards

great credit score

ideally want a

high score because the higher the better

joint account

holder shares ownership of and, typically, uses credit card and legally respobsible for paying bill. Until account is paid off and closed, all parties on card are liable for debt even if one party made charges

fraudulent accounts (3 most common credit reporting errors)

identity theft huge issue can negatively impact credit and make life difficult as clean up their mess sooner identify it better chance of stopping it before difficult situation main worry for HS students

low interest rates on credit cards and loans (1 - 9 benefits of having good credit scores)

if have good credit score almost always qualify for best interest rates and you'll pay lower finance charges on credit card balances and loans less money interest = less time will take to pay off debt

debt isn't a bad thing

if it's the right kind of debt and right percentage

if miss payment when credit score in 700s will

impact you more than if in 600s because reason have a good score in 700s is beause paid everything on time and good debtratio so if miss payments gonna drop. Not 100 points but will drop. Whereas if in 600s is aerage and probably been high amount debt so not drop as much if already super high

3 most common credit reporting errors

inaccurate account information incorrect personal details fraudulent accounts

credit history (4 main sections of your credit report)

includes all open and closed accounts your track record for paying them

debt

is money owed by a borrower to a lender

FICO

isn't credit bureus but rather company founded on scoring credit reports, works closely with 3 bureaus to create scores scores help lenders understnad reports and determines credit worthiness

on credit report if something wrong on it about certain account: if

it is bank related call the bank first and tell them issue and get them to correct it. If that doesn't work there, go to the agency. If went to agency first would tell you to go talk to the bank first

easier approval for rental houses and apartments (5 - 9 benefits of having good credit scores)

landlords using scores to screen tenants. good score saves you the time and hassle of finding a landlord that will approves renters with damaged credit

punishmet for late payment on student loan

lawsuit, wage garnishment

credit inquiry

list of people who has reviewed your file

home and car loan lenders (Who sees the credit report)

loan approval depends on good credit report and so does rate

Jackson county compared to Missouri and Nation with credit score

lower in prime than state and nation higher in subprime than both because KC and it's high poverty rate

thin file

means there is no credit/very little credit meaning teenagers means lack of credit teenagers don;t have loans or have very few loans this makes it hard to create credit score with lack of debt which is a good thing because no debt, but is a bad thing because when comes time want to get a loan may be difficults because hard to generate score based on that

CAN and SHOULD review your reports by

monitoring them checking for accurage seeing what factors affecting scores

Type of loans that could result in seizure of your property (where they take you property) include

mortgage (house foreclosed), auto loans (repossesion), tax debt (not attached to a property, but if owe IRS money will get their money eventually, might be able to hold them off for awhile, but eventually will get their money - can take money from your bank account, can contract your employer and have wages garnished and sent directly form your check to IRS until pay it back) *is a secured debt as it has collateral attached to it*

personal information (4 main sections of your credit report)

name address (previous and current ones) SSN date of birth

unsecured credit card with bad credit

no deposit required harder to get approved high fees no credit line control potential for debt

18-year-old has thin file because

of age and haven't had the ability/ necessary means to get a loan

a higher percent of millennials hold debt than nay other group, except Gen X, yet average Milennial debt is lower than every group except Silent Generation (age 75+). This is cause

of age. Have not been debt acquiring age long enougher, younger. Older get the more opportunities (more years have) to accumulate debt

can get a credit report free

once a year

get copy of credit reprt at least

once a year because studies show about 30%=40% of all reports have at least one serious error on them so credit report and score may be impacted and you wouldn't know also because identity theft is a growing issue, when someone is taking your personal information and opening up charge cards/buying items with using your identiy, statments would go tot heir address so no way of knowing about it but would be on report

credit report includes

personal identity - name, address, SSN (personal identity does not impact your score but used to find you when lender requests your report, can protect against potential identity theft by checking for accuracy public records the court collects on bankruptcy no/late payment - ever had unpaid bill turned over to collection agency will likely show on report too, collection for no/late payment, payment demands trade lines - form the heart of the report, information about various credit accounts (when opened, loan amount, current balance, payment history), EX; credit cards, car loans, student loans, mortgages, retail accounts, usually information reported by creditors on monthly basis inquiry - whenever someone accesses report, inquiry is filed many types inquires (EX: promotion, consumer disclourt, and credit application inquries,), scores on based on last type inquiry

4 main sections of your credit report

personal information credit history public records credit inquires

credit report order

personal information on top then goes into account information (name of lender, information about them -address and number-, balance, date updated, high balance, credit limit, past due amount, pay status (want paid/paying as agreed), type of account: joint account (with someone else ie spouse) or individual account, date opened, date paid, loan time, and continues for each lender inquireies

inaccurate account information (3 most common credit reporting errors)

possible for accounts that don't belong to you to end up on your report common: showing open account as closed, reporting incorrect balance, or listing you as owner of account when only an authorized user at age 45 this one is most important because if wrong causes lower score and that prevents you from buyng house or car

Who sees the credit report

potential employers home and car loan lenders car insurance companies your landlord credit card companies

most people either gonna be in

prime/subprime smallest percentage in near prime

reason have low credit score and callenges people living in county or state with igh concentration of subprime scores facing as reult of lowcredit

reason - poverty, income levels challenges - ability to get loans

credit score scale

runs from 300-850

it is unlikely for banks to offer you a loan or credit card when have

score below 600 but varies bank to bank and typically reason below 600 because late payments to get it up make payments on time, could time up to a year but maiing paymets on time will increase score

actual report with information is free but

score is not, that's how they make their money and costs between $5-$10 on each of the 3 agencies. If don't want to pay for score at least get copy of report on all bureaus, read through them and work to getting errors corrected because could be impacting you significantly and costing you a lot of money

credit card companies (Who sees the credit report)

see how pay on other credit accounts

payday loans

short-term cash loans that borrow expected to pay back with next paycheck very high interest rates and fees result of this is that borrwer takes lot less home of their pay often causes cycle of debt avoid this by keeping money aside for emergencies so don't have to resort to this)

credit inquires (4 main sections of your credit report)

shows everyone who's checked your credit in past 2 years

credit report is a

snapshot of private stuff: how much debt have and how good are about paying things back (ie collections, unpaid child support, unpaid bills, bankruptcy etc) thing lenders look at when apply for a loan is important electronic file based on previous and current credit history

potential employers (Who sees the credit report)

some may ask to see because want to find out how responsible with money

avoid security deposits on utilities (8 - 9 benefits of having good credit scores)

sometimes $100-$200 and huge inconvenience when relocating good credit score means won't have to pay security deposit when establish utility service in your name/to transfer service to another location

payment history (5 factors that determine credit score)

the most important piece of credit profile and accounts for about 35% of score if been responsible in past can be trusted in the future so avoid late payments at all costs

If kids are good at managing debt then

they are in much better position when stakes are higher

credit reports are dynamic as

they change when lenders updat your information/new public records posted about you which can impact score

car insurance companies (Who sees the credit report)

think if have bad report more likely to file a claim

punishment for late payment on Federal loan

wage garnishment, tax refund seizure, partial seizure of Social Security benefits more thing happen with this than punishmet for late payment on student loan

your loandlord (Who sees the credit report)

want to make sure pay rent on time when renting place

lenders can access credit reports to determine

wheterh qualified or risky candidate for credit

credit report says payment

year and will keep going back and if says okay payment made on time

when a bank is looking at your creditworthiness, whether they should give you a loan/not, they're looking at

your history of repayment and if is no history/very little is hard to them to base on whether you are a good risk to give a loan to

11 ways get out of debt faster

1) Pay more than the minimum payment 2) Try the debt snowball method 3) Pick up a side hustle 4) Create (and live with) a bare-bones budget 5) Sell everything you don't need 6) Get a seasonal, part-time job 7) Ask for lower interest rates on your credit cards - and negotiate other bills 8) Consider a balance transfer 9) Use "found money" to pay off balances 10) Drop expensive habits 11) Step away from the _____.

new credit (5 factors that determine credit score)

10% takes into account how often you take on credit don't need EX: applying for credit card at 5 favority new stores

most credit scores see between

500 and high 700s rarely below 500 and above 800

Federal Trade Commission is the agengy that enforces the

Equal Credit Opportunity Act (ECOA)

3 big credit agencies/bureaus (are a lot) but these are main 3:

Equifax experion transunion can go and get free copy of credit report go to website www.anualcreditreport.com which is best place to get free report

identity theft

a growing issue lots different reasons main thing need to know is don't let it happen, need to check credit report one a year to make sure everything looks good and make sure ntohing fraudulent on there be aware of this

amounts owed/credit utilization (5 factors that determine credit score)

aka actual debt second most important factor about 30% of score important because not having good score doesn't mean you don;t borrow in fact not using your credit is almost worse than using tons of it want to show can handle reasonable amount of debt without going off rails

wage garnishment

take money out of your check

all information on credit score determines

the credit score 0 measure of credit rish used by 90% of the top lenders

5 factos that determine credit score and all have varying imporance levels of importance

1) payment history 2) amounts owed/credit utilization 3) length credit history 4) types of credit 5) new credit

types of credit (5 factors that determine credit score)

10% reviews how many sources borrowing use (car loan, mortgage, credit card), the more diverse the better

What percent of millennials have some type of debt? What is their average amount?

86% $46,000

national percentage with credit file and credit score

89.3%

Equal Credit Opportunity Act (ECOA)

underneath this law credit discrimination is forbitted creditors cannot accept/deny an applicat based on race, color, age, religion, national origin, sex, marital status, or because receive public assistance are allowed to requiest this information but cannot be used towards/against you to make a decision law covers any business/organization that extends credit, EX: banks, small loan and finance companies, retail and department stores, credit card companies, credit card unions or credit unions, everyone involved with provision of credit/the decision of terms must comply is a legal agt that banks and lenders have to follow when it comes to issuing credit cannot discrimate based on demographics and it has to be based on credit worthiness in your credit report

incorrect personal details (3 most common credit reporting errors)

unusual to find error with this find out whether new information added to your account recently

9 benefits of having good credit scores

1) Low interst rates on credit cards and loans 2) better change for credit card and loan approval 3) more negotiating power 4) get approved for higher limits 5) easier approval for rental houses and apartments 6) better car insurance rates 7) get a cell phone on contract with no security deposit 8) avoid security deposits on utilities 9) bragging rights

things to consider when thinking about borrowing money:

Is what your buying truly necessary? Do you have room in your budget to cover the monthly payments? Could you save money for a few months to pay for it instead of borrowing for it? After totaling total amount money will pay in interest over time, will the purchase still be worth it

State that has highest persent of credit economy with subprime credit score

Mississippi 47.9%

states that have highest perct of credit economy with prime credit score

Vermont, New Hampshirt, Massachusetts, Wisconsin, Minnesota, Iowa, North and South Dakota, Nebraska, Montana, utah, Colorado, and Washington

leng credit history (5 factors that determine credit score)

about 15% longer been borrowing the better

debt for "wants"

aren't necessary and good put in huge debt stresses future budge cost a lot more money than original price

on application sign giving

permission of for individuals to check your report and to see who loos on report look at credit inquiries