1. Ditching your debt and Controlling your Credit Jennifer Abel 703-228-6417jabel@vt.edu

2. What we’ll cover The pitfalls of credit The pitfalls of credit Credit reports and scores Credit reports and scores Correcting errors on reports Correcting errors on reports Creating a debt repayment plan Creating a debt repayment plan Communicating with creditors Communicating with creditors Credit counseling services: getting help and spotting the scams Credit counseling services: getting help and spotting the scams

3. Pitfalls of credit Not managing your credit wisely can lead to: Not managing your credit wisely can lead to: Increased annual percentage rates (APRs) Increased annual percentage rates (APRs) Unnecessary fees Unnecessary fees A decline in your credit score A decline in your credit score Denials of future credit requests Denials of future credit requests

4. Credit reports and scores Lenders report your credit usage to Credit Reporting Bureaus. The three largest are: Lenders report your credit usage to Credit Reporting Bureaus. The three largest are: Equifax Equifax Experian Experian TransUnion TransUnion

5. What is in a credit report? Identifying Information Identifying Information Credit History Credit History Public Record Information Public Record Information Inquiries Inquiries

6. What is not in a credit report? Income Income Length at Job or Residence Length at Job or Residence Amount of Savings Amount of Savings Job Title Job Title References References Age Age

7. Fair and Accurate Credit Transactions Act Allows you to get a free copy of credit report annually from each bureau (does not include score) Allows you to get a free copy of credit report annually from each bureau (does not include score) Limits who can look at your report Limits who can look at your report Limits how long negative info can stay there (generally 7 years) Limits how long negative info can stay there (generally 7 years) Positive info stays for ten years Positive info stays for ten years Keeps inaccurate info from staying in your file Keeps inaccurate info from staying in your file

8. Methods of checking your report On-line: www.annualcreditreport.com On-line: www.annualcreditreport.comwww.annualcreditreport.com By phone: 1-877-322-8228 By phone: 1-877-322-8228 By mail: By mail: Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281 Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281

11. YES!

12. Says Who?

14. Credit Score: FICO A number between 350 and 850 that reflects your creditworthiness A number between 350 and 850 that reflects your creditworthiness Not provided with your free report; must pay fee of $7.95 per report to obtain score Not provided with your free report; must pay fee of $7.95 per report to obtain score Mortgage and auto lenders now required to divulge your score when evaluating your credit Mortgage and auto lenders now required to divulge your score when evaluating your credit

15. Credit Scoring Factors

16. Correcting errors on your report Contact the fraud department of each bureau Contact the fraud department of each bureau They must investigate and provide answer within 45 days They must investigate and provide answer within 45 days You can place fraud alert on your report and include 100 word statement You can place fraud alert on your report and include 100 word statement

17. How to opt out of pre-approved credit card offers The national credit bureaus offer a toll-free number that enables consumers to opt-out of all pre-approved credit offers with just one phone call. Call 1-888-5-OPTOUT (1-888-567-8688) for more information.

18. Creating a debt repayment plan Stop incurring new debt Stop incurring new debt List whom you owe, total balances, monthly payments, APR List whom you owe, total balances, monthly payments, APR Develop a spending and saving plan to determine how much you have available for debt payments Develop a spending and saving plan to determine how much you have available for debt payments Make a schedule of monthly payments Make a schedule of monthly payments Go to www.powerpay.org for help Go to www.powerpay.org for helpwww.powerpay.org

20. Communicating with creditors Ask for reductions in APR, credit limit increases, fees waived Ask for reductions in APR, credit limit increases, fees waived If going to miss a payment, contact creditor ahead of time to explain situation If going to miss a payment, contact creditor ahead of time to explain situation Get the name and employee ID or badge number of the person you talk Get the name and employee ID or badge number of the person you talk Document date, time, and result of all calls in writing Document date, time, and result of all calls in writing

21. Communicating, cont. If not satisfied, ask to speak to manager If not satisfied, ask to speak to manager State clearly what you are asking for (e.g. new payment plan, reverse fees, lower interest rate) State clearly what you are asking for (e.g. new payment plan, reverse fees, lower interest rate) Be polite but persistent Be polite but persistent If you are being harassed by collectors, can ask them to stop calling you If you are being harassed by collectors, can ask them to stop calling you Provision of the Fair Debt Collection Practices Act Provision of the Fair Debt Collection Practices Act

22. Credit counseling Avoid scams: choose a reputable agency Avoid scams: choose a reputable agency Many services charge fees; consider if what they are asking for is reasonable Many services charge fees; consider if what they are asking for is reasonable Many things they charge money for you can do yourself Many things they charge money for you can do yourself Find a reputable agency through the National Foundation for Credit Counseling: http://www.nfcc.org/ Find a reputable agency through the National Foundation for Credit Counseling: http://www.nfcc.org/ http://www.nfcc.org/

23. The truth about credit repair No one can have accurate information removed from your credit report. No one can have accurate information removed from your credit report. If you have had credit problems in the past, it can take years to repair your credit legitimately. If you have had credit problems in the past, it can take years to repair your credit legitimately. No one can create a new identity for you. No one can create a new identity for you. You can order your credit report yourself. If you see errors on your report, you can also request that the credit reporting agencies make appropriate changes. You can order your credit report yourself. If you see errors on your report, you can also request that the credit reporting agencies make appropriate changes.

24. RULES OF THUMB RULES OF THUMB DO NOT BUY WHAT YOU CANNOT AFFORD DO NOT BUY WHAT YOU CANNOT AFFORD ITEMS SHOULD LAST LONGER THAN PAYMENTS ITEMS SHOULD LAST LONGER THAN PAYMENTS DON’T THINK MINIMUM PAYMENT DON’T THINK MINIMUM PAYMENT USING CREDIT COMMITS FUTURE INCOME USING CREDIT COMMITS FUTURE INCOME