Welcome to the Faith and Finances Series

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Welcome to the Faith and Finances Series

• UNDERSTANDING CREDIT
• God has called us to be good stewards
• Moreover it is required in stewards that one be
  found faithful
• 1Corinthians 42

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Purpose

• Understanding Credit will
• Show you how to read a credit report
• Help you understand how your behavior affects
  your credit health
• Help you build and repair your credit history
• Provide you with good credit practices

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Objectives

• By the end of this course, you will be able to
• Describe the purpose of a credit report and how
  it is used
• Read your credit report
• Order a copy of your credit report
• Identify ways to build and repair your credit
  history

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Understanding Credit Week 1 of 4

• How do I read my credit report/ Whats in my
  credit score

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Credit Report

• A credit report is a record of how you have paid
  your debts. It tells lenders
• Who you are
• How much debt you have
• What credit you recently opened or are trying to
  get
• Whether you have delinquent payments and/or
  public records.

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The Three Credit Reporting Agencies

• Equifax
• Experian
• TransUnion
• Also called Credit Bureaus

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How Your Credit Report Is Used

• Information in your credit report may determine
  whether you will
• Get a loan, credit card, car loan, or mortgage
• Get a job
• Rent an apartment
• Get insurance
• Determine how much you pay for credit

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Reasons Credit May Be Denied

• No credit history
• Past credit problems
• Too much credit
• Negative information in public records

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What Are Public Records??
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Information in a Credit Report

• Personal information
• Account Summary
• Inquiries from creditors and other authorized
  parties
• Public record information

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Sample Credit Report
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Whats a Credit Score???

• The credit score is
• A number that summarizes how much of a credit
  risk you could be
• Calculated based on a snapshot of the
  information in your credit report at a point in
  time

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Different Names of Credit Scores

• BEACON Score - Equifax Credit Bureau
• Experian Score- Experian Credit Bureau
• FICO Score - TransUnion Credit Bureau

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Credit Scores

• Credit Scores are Most Commonly Referred to as
  FICO Scores

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FICO Score

• Scores range from about 300 to 850
• Takes into account
• Past payment history 35
• Amount owed 30
• How long you've had credit -15
• New credit 10
• Types of credit 10

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Your FICO Score Matters

• Why???
• Higher FICO Scores Result in Lower Interest
  Rates and Paid for Credit

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Example- 25,000 4 Year Auto Loan
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Auto Loan Example

• If Your Score is gt 760, You Paid 5,280 Less Than
  the Someone with a Score lt 579 Over the Life of
  the Loan..
• . Your Monthly Payment is 110 Lower

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300,000 30 Year Fixed Rate Mortgage in Maryland
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Mortgage Loan Example

• If Your Score is gt 760, You Paid 644,400 Less
  Than the Someone with a Score lt 579 Over the Life
  of the Loan..
• . Your Monthly Payment is 1,184 Lower

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Short Quiz

• What information is on a credit report?
• How many credit bureaus are there?
• What is the most common name for a credit score?
• What are the 5 areas credit scores take into
  account?
• The higher your score, the ______ interest rate
  you pay.
• Give two reasons why credit may be denied.
• T/F God calls us to be good stewards over what
  he gives us.

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Home Activities

• Before Week 2
• Visit www.myfico.com and read Understanding Your
  FICO Score
• Make a List of all of your debts and how much you
  owe
• Answer these questions
• Have you ever reviewed your credit report?
• When is the last time youve reviewed your credit
  report?
• How many different types of credit do you have?
• How many years have you had credit?
• Have you been late paying your bills?
• How many months late on each loan?
• Do you have any negative items, public records
  filed against you?

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References

• www.myfico.com
• Understanding Your FICO Score
  (www.myfico.com/crediteducation)
• www.fdic.gov/moneysmart

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Next Session Week 2 of 4

• Help you understand how your behavior affects
  your credit health
• Making Payments on Time
• Using Debt Reasonably
• Inquiries
• Types of Debt