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 a history of paying money back on time and in full. You get more money offered and lower interest rates.

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.

Good vs. Bad Credit How can you build good credit? Maintain a balanced check book – no bounced checks Consistently paying bills on time Having no criminal history Having a low number of credit cards Checking credit score to remove any errors

Good vs. Bad Credit Building bad credit Missing a payment Not paying the minimum Having a criminal record Having too much available credit Filing for bankruptcy

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.

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 purchases You don’t have loans Being 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.

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

Good vs. Bad Credit What is part of your credit report? Every loan/credit card you’ve applied for or received Amount received Monthly payments If you’ve paid on time If other lenders have asked to see your credit report Your 3 digit FICO score Employment history Public records – criminal history

Good vs. Bad Credit What will your credit report determine? If you get a loan The interest rate you are charged on the loan The better your credit score the lower your interest rate and the more money you will ultimately save.

Good vs. Bad Credit Why is a good credit score important: To get a mortgage To finance home electronics/appliances To get a car loan To get a job

Good vs. Bad Credit FICO Score – tells lenders in a single number how credit worthy you are >750 excellent credit 720-750 very good credit 660-720 Acceptable credit 620-660 uncertain credit <620 risky credit http://www.youtube.com/watch?v=pAL7QTbay0o

Good vs. Bad Credit Your credit score is determined by: 35% payment history – timely manner of paying bills. 30% outstanding debt – amount of current debt 15% credit history – amount of time you have held credit accounts and how often they are used 10% pursuit of new credit - # of accounts opened in a time period. 10% types of credit in use – credit cards, gas cards, store cards, loans

Good vs. Bad Credit Companies that publish credit report Equifax TransUnion Experian http://www.youtube.com/watch?v=uqKJyCgOQiw