1. Building Your Credit
Partners In Community Building, Inc 2018

2. Components of a credit score
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Components of a credit score

3. 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

4. Payment history tips Pay your bills on time
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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.

5. 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

6. 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.

7. 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 or
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.

8. 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.

9. Fixing errors Check your credit report annually
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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

10. Disputing your credit report
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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.

11. 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

12. 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.

13. 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 % for older debt)

14. 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

15. 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

16. Offer a settlement amount
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Offer a settlement amount
Estimate 40-75% of debt
Two options:
Contact company by telephone
Contact company by mail

17. Option 1: Contact by telephone
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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.

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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 (
National Consumer Law Center (
Don’t be fooled by ads that claim they can erase bad credit!
If it sounds too good to be true, it probably is

24. Resources http://www.federalreserve.gov/creditreports/
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Resources
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25. 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
(f)
Monday – Friday
9:00 AM – 5:00 PM