Rating Your Credit and Help for Credit Problems

What is your credit score?

A score that tells everyone if you are a good risk

Credit bureaus sell credit score information to lenders

Higher score means you can borrow money at a lower interest rate

Your Credit Score

Typical Scores…..

How is the average American doing?

Great Credit Score Saves You Money

Poor Credit Score Costs You Money

It obvious…you want a good credit score

$639,720 $891,720

Credit Scores Make a Big Difference!

Credit score determined by….

Employment and incomeHousing (rent or own?)Assets

What you own (investments, savings accounts, etc.)

Credit history How many loans do you have? What do you owe on each one? Are you close to your credit limit? How prompt are you with payments?

If you don’t pay off your loans……

Called defaulting on a loan

Property can be repossessed

Home foreclosureWages garnishedBankruptcy

Reduces what you owe but future borrowing will be very difficult

How do you fix your credit problems?

Change behavior Cut up credit cards Needs versus wants

Get on a budget!Work with creditors to create

new payment schedulesNon-profit credit counseling

agenciesProfit credit counseling

agencies Careful! You often must

pay a fee…another bill!