Presentation on theme: "Good vs. Bad Credit Credit – the ability to borrow money and pay it back later. Good credit means: Lenders want to loan money to you because you have."— Presentation transcript:
1 Good vs. Bad CreditCredit – the ability to borrow money and pay it back later.Good credit means:Lenders want to loan money to you because you have a history of paying money back on time and in full.You get more money offered and lower interest rates.
2 Good vs. Bad Credit What does it mean to have bad credit? Lenders don’t want to loan you money because you don’t pay your bills on time or in full.Less money will be offered to you and your interest rate will be higher.
3 Good vs. Bad Credit How can you build good credit? Maintain a balanced check book – no bounced checksConsistently paying bills on timeHaving no criminal historyHaving a low number of credit cardsChecking credit score to remove any errors
4 Good vs. Bad Credit Building bad credit Missing a payment Not paying the minimumHaving a criminal recordHaving too much available creditFiling for bankruptcy
5 Good vs. Bad Credit Why is building a credit history important? If you plan on making big ticket purchases in your life.It will determine if you will get the loan, credit card, lease and what interest rate you will be charged.
6 Good vs. Bad Credit You do not build a credit history if… You don’t have any credit in your name.You pay cash for all major purchasesYou don’t have loansBeing late with a credit card or loan payment even once your credit report is impacted and will remain on your credit report for the next 7 years.
7 Good vs. Bad Credit What is a credit report? A collection of facts about you that tells lenders whether you’re a good risk to lend money to
8 Good vs. Bad Credit What is part of your credit report? Every loan/credit card you’ve applied for or receivedAmount receivedMonthly paymentsIf you’ve paid on timeIf other lenders have asked to see your credit reportYour 3 digit FICO scoreEmployment historyPublic records – criminal history
9 Good vs. Bad Credit What will your credit report determine? If you get a loanThe interest rate you are charged on the loanThe better your credit score the lower your interestrate and the more money you will ultimately save.
10 Good vs. Bad Credit Why is a good credit score important: To get a mortgageTo finance home electronics/appliancesTo get a car loanTo get a job
11 Good vs. Bad CreditFICO Score – tells lenders in a single number how credit worthy you are>750 excellent creditvery good creditAcceptable credituncertain credit<620 risky credit
12 Good vs. Bad Credit Your credit score is determined by: 35% payment history – timely manner of paying bills.30% outstanding debt – amount of current debt15% credit history – amount of time you have held credit accounts and how often they are used10% pursuit of new credit - # of accounts opened in a time period.10% types of credit in use – credit cards, gas cards, store cards, loans
13 Good vs. Bad Credit Companies that publish credit report Equifax TransUnionExperian