Building Your Credit Partners In Community Building, Inc 2018

Components of a credit score PICB - Credit Building Components of a credit score

Improving your credit score PICB - Credit Building Improving your credit score Just like losing weight, raising your credit score takes time and there is no quick fix

Payment history tips Pay your bills on time PICB - Credit Building Payment history tips Pay your bills on time After 12 months this will be a good line of credit Get current and stay current on payments If you cannot pay on time, try to make the minimum balance prior to the 30-days notice Contact your creditors or see a credit counselor -Keep the accounts you have in good standing current. Consider paying the accounts that are in best standing. It is almost always best to pay on open lines of credit before paying on collections or profit and loss write-offs. -If you have no open accounts consider purchasing a secured credit card, charge small amounts ($10-30) monthly and pay off in full. Do not carry a balance. -Contact your credit counselor or creditors if you have trouble making ends meet.

PICB - Credit Building Amounts owed tips Keep balances low on credit cards and other “revolving credit” Pay off debt instead of moving it around Don’t close unused credit cards Don’t open several new credit cards that you don’t need -High outstanding debt can affect a credit score. -The most effective way to improve your score is by paying down your revolving credit. Owing the same amount but having fewer open accounts may lower your score. -Consider 30% rule (if your limit is $1,000, try to keep your balance below $300). -Keep long-time accounts open and avoid opening lots of new accounts

Length of credit history tips PICB - Credit Building Length of credit history tips Don’t open a lot of new accounts too rapidly New accounts lower your average account age Avoid closing a lot of old accounts Keep your oldest accounts open If you are a new credit user, rapid account buildup can look risky Avoid applying for credit to get a free T-shirt or for a discount on an item you want to buy -Lenders worry that you’ll borrow too much money if you have recently opened a number of new accounts.

PICB - Credit Building New credit tips Do interest rate shopping for a given loan within a focused amount of time Open new accounts responsibly and pay them off on time Request and check your own credit report Order directly from the credit reporting agency or an organization authorized to provide credit reports to consumers www.annualcreditreport.com or 877.322.8228 Great information about your credit accounts and history, but no credit score included. -Credit scores distinguish between a search for a single loan and a search for many new credit lines, and the time over which inquiries occur. -Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.

PICB - Credit Building Types of credit use Apply for and open new credit accounts only as needed Use credit cards and loans responsibly Keep in mind that closed accounts will still show up on your credit report Understand how to read your credit card statement -Paying your mortgage and car payments on time is important.

Fixing errors Check your credit report annually PICB - Credit Building Fixing errors Check your credit report annually If you find errors on your credit report, take action ASAP Errors are potentially very damaging to your credit score

Disputing your credit report PICB - Credit Building Disputing your credit report You have the right to dispute information on your credit report. Can be done online or in writing An investigation will occur and you will receive a Result of Investigation Letter that explains the credit bureau findings. Could result in deletion of inaccurate information If you are not satisfied with the finds of the investigation, you have the right to put a 100-word statement on your report regarding the matter.

Common errors Is your personal identification information correct? PICB - Credit Building Common errors Is your personal identification information correct? Did something appear more than once? Did someone look at your credit report without your permission? Is an inquiry shown on your report for more than two years? Is a bankruptcy listed more than 10 years old? -Common errors include incorrect personal info, duplicate information, uninvited inquiries, length of inquiry, length of bankruptcy

Steps to correcting errors PICB - Credit Building Steps to correcting errors Copy your credit report Highlight the error Write a letter that explains the error Copy additional information to support your claim Send all of the above to the credit bureau Provide participants with a sample letter.

Resolving negative debt on a credit report PICB - Credit Building Resolving negative debt on a credit report Pay off in full Arrange schedule Offer settlement amount for payment in full (approximately 40-75% for older debt)

Paying off in full Send cashier’s check or certified money order PICB - Credit Building Paying off in full Send cashier’s check or certified money order In the memo section write “for payment in full” and the account number Keep a record of the names/phone numbers of people you speak with Have creditor send you a letter stating the account is paid off in full Request a receipt that shows a zero balance Send copies of receipt and letter to all three credit bureaus Ask each bureau to update the accounts to show paid in full

Arranging payment schedule PICB - Credit Building Arranging payment schedule Contact the company by phone or mail Find out if they would accept monthly payments Keep records of the names/phone numbers of people you speak with Keep copies of payments you send in After several months offer a settlement amount as payment in full Update bureaus when account is paid in full

Offer a settlement amount PICB - Credit Building Offer a settlement amount Estimate 40-75% of debt Two options: Contact company by telephone Contact company by mail

Option 1: Contact by telephone PICB - Credit Building Option 1: Contact by telephone Before you call: Have the money on hand to send immediately after negotiating a deal Know your target amount you want to pay, offer less, and plan to negotiate Do not agree to pay more than you can afford Explain that you are interested in paying account off Negotiate a settlement and pay by date agreed Keep records -Keep records of the dates, times, names, and phone numbers of the people that you speak with.

Option 2: Contact by mail PICB - Credit Building Option 2: Contact by mail Send the company a letter with the certified funds attached Write account number and paid in full in the memo section Letter should say you are sending the amount as payment in full Keep copy of certified funds and copy of letter Request a letter be sent stating account was paid off Send copies to all three bureaus

Understanding bankruptcy PICB - Credit Building Understanding bankruptcy Bankruptcy is a last resort Cannot clean up a bad credit record Stays on your credit report for up to 10 years Typically does not eliminate child support, alimony, fines, past-due taxes, and student loans Before considering bankruptcy, talk to a financial coach / counselor

Types of bankruptcy Chapter 7 Chapter 13 PICB - Credit Building Types of bankruptcy Chapter 7 Wipes out all allowable debts and provides certain personal-property exemptions Debtor gives up all property unless the state finds that the debtor needs it to support his or her dependents Chapter 13 Court-approved repayment plan Debtor keeps all property and makes regular payments on debt after filing for bankruptcy

Long-term effects of bankruptcy PICB - Credit Building Long-term effects of bankruptcy Could determine whether or not you get the job you want Insurance rates may increase May be difficult to rent an apartment or qualify for a home loan Bankruptcies stay on your report for 10 years

Alternatives to bankruptcy PICB - Credit Building Alternatives to bankruptcy Before filing bankruptcy, try the following strategies: Reduce spending Negotiate a payment plan with your creditors Work with your credit counselor to create a debt repayment plan Consider debt consolidation-analyze risks and consequences of this action first

Obtaining help Talk to your financial coach PICB - Credit Building Obtaining help Talk to your financial coach They can help you negotiate with creditors or set up a spending plan Learn more by visiting the following websites: Federal Trade Commission (www.ftc.gov) National Consumer Law Center (www.NCLC.org) Don’t be fooled by ads that claim they can erase bad credit! If it sounds too good to be true, it probably is

Resources http://www.federalreserve.gov/creditreports/ PICB - Credit Building Resources http://www.federalreserve.gov/creditreports/ https://dispute.transunion.com/dp/dispute/lan dingPage.jsp https://www.ai.equifax.com/CreditInvestigation /home.action

For more information and to make an appointment contact; PICB - Credit Building For more information and to make an appointment contact; Partners In Community Building, Inc. 1325 S. Wabash Ave. Suite 206 Chicago, IL 60605 312.328.0873 312.328.0879 (f) www.picbchicago.org Monday – Friday 9:00 AM – 5:00 PM