1. So What is Credit Anyway? The truth about credit and credit reports

2. Credit An arrangement for deferred (delayed) pay-back of purchases or cash Measured by a number known as a credit score Typically 300 – 850 The higher the better!!!

3. Positive Credit A consumer can build positive (high/good) credit by being responsible with credit choices ◊ Practice good banking techniques ◊ Pay bills consistently and on time ◊ Keep public records free of bankruptcy ◊ Keep a reasonable or small amount of debt ◊ Apply for credit sparingly, keeping credit inquiries low ◊ Hold a low number or credit/store cards ◊ Check credit report annually to remove errors

4. Negative Credit This results from irresponsible (poor/bad) credit choices  Bouncing checks  Routinely paying bills late  Having a criminal record  Holding a large amount of debt  Carrying many credit/store cards  Defaulting on a loan  Having cards over the limit

5. NO Credit If you continuously pay cash for all purchases and never apply for credit/bank accounts, you will not have the chance to build your credit Can result in being denied credit for future purchases (car, house, etc.) It is IMPORTANT to build some credit

6. 5 Categories for Credit Scoring 1. 35%-Payment history - Timely manner in which a consumer pays debt 2. 30%-Outstanding debt -Amount of debt currently held 3. 15%-Credit history -How long the consumer has held credit accounts and how often they are used 4. 10%-Pursuit of new credit -How much credit is acquired over the length of the consumer’s credit history 5. 10%-Types of credit in use -May include credit cards, gas cards, store cards or accounts, loans, etc.

7. Other Credit Score Factors ◊ Length of time at current address ◊ Current income ◊ Financial information ◊ Late payments

8. General Rule! Keep the amount of debt currently held at 25% of the total amount of available credit For example - if Sue’s total amount of credit available is $1,000, her current amount of debt should not exceed $250

9. Credit Report ◊ a record of a consumer’s credit history ◊ Credit history - a record of transactions involving credit use ◊ Individuals do not have a credit report if they have not previously used credit

10. Information on Credit Reports  Name and aliases  Current and past addresses  Marital status  Date of birth  Employment history  Public records ◊ Criminal/financial  Payment History  Loans  Open/existing credit  Number of credit inquiries (requests for credit)

11. CRA’s (Credit Reporting Agencies) Keeps track of consumer’s credit transactions and compiles credit reports Equifax Trans Union Experian

12. Who reports to CRA’s? ◊ Store accounts ◊ Credit card companies ◊ Mortgage and other loan lenders ◊ Financial institutions ◊ Landlords ◊ Courts ◊ Utility accounts ◊ Cellular phone companies ◊ Delinquent accounts

13. Credit Cards – friend or foe? The Pros and Cons of Credit Card Use

14. Top 4 Companies Visa Mastercard American Express Discover

15. Credit Card Pro’s Virtually “free” money! More secure than carrying cash Flexible spending Rewards for spending! Helps you pay on time when your in a bind Build credit!!!

16. Credit Card Con’s Most Expensive Debt (highest interest rates – typically 18 – 20%) More prone to fraud/identity theft Makes it easier to overspend Pay for more than you purchased (sometimes more than double!!)

17. Tips for Positive Credit Card Use Record your purchases to keep track of spending (basket of receipts) Avoid purchasing things you know you can’t pay off short-term Choose a card with NO annual fees and sensible reward options ALWAYS pay more than the minimum balance

18. Things to look out for… Annual Fees (yearly cost for owning the card) Interest Rates (charge on borrowed money each month it’s not paid back) Restrictions on Rewards Additional Benefits (i.e. checks) Misc. Charges

19. Possible Benefits! Cash Back/Rebates Reward Points Investment Rewards Frequent Flyer Miles Gas Rewards Automobile Rewards Hotel Rewards Theme Park Rewards Dining/Restaurant Rewards Brand Name Rebates Low Interest Cards Charitable Contributions

20. Some examples!! VISA Disney, Bucks Back, Amazon, VW, Wawa, Marriott, BP, Home Improvement MasterCard Home Rebate, Toys R Us, Driver’s Edge American Express Delta, JetBlue, Hilton, The Knot Discover Miles, Open Road, Student, Business