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Understanding Your Credit: Building and Repairing Your Credit History

This course offers an in-depth overview of credit reports and scores, equipping you with essential skills to manage your credit effectively. You will learn to read your credit report, understand credit scoring systems like FICO and VantageScore, and identify methods for building and repairing your credit history. Additionally, the course addresses common issues like identity theft and emphasizes the importance of maintaining error-free credit reports. By the end, you'll be confident in taking control of your credit to reach your financial goals.

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Understanding Your Credit: Building and Repairing Your Credit History

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  1. To Your Credit

  2. Introduction • Instructor and student introductions. • Module overview. To Your Credit

  3. Student Introductions • Your name. • Your expectations, questions, and concerns about credit. To Your Credit

  4. Purpose To Your Credit will: • Show you how to read a credit report. • Help you build and repair your credit history. To Your Credit

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

  6. Agenda and Ground Rules • 90 minutes long. • One 10-minute break. • Training methods. • Classroom participation. To Your Credit

  7. 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. • Whether you have made payments on time. • Whether there is negative information about you in public records. To Your Credit

  8. Credit Reporting Agencies • Equifax • Experian • TransUnion To Your Credit

  9. Information in a Credit Report • Identifying information • Credit history • Inquiries from creditors and other authorized parties • Public record information To Your Credit

  10. Public Record Information To Your Credit

  11. Personal Bankruptcy • Chapter 13 • Chapter 7 To Your Credit

  12. How Your Credit Report Is Used Information in your credit report may determine whether you will: • Get a loan or other form of credit. • Get a job. • Rent an apartment. • Get insurance. To Your Credit

  13. Reasons a Loan Application May Be Denied • No credit history • Past credit problems • Negative information in public records To Your Credit

  14. Credit Score The credit score is: • A number that predicts how much of a credit risk you will be. • Calculated based on information in your credit report. Check your credit score before applying for new credit. To Your Credit

  15. FICO Score • Scores range from about 300 to 900. • Takes into account: • Past payment history – 35 percent • Outstanding debt – 30 percent • How long you've had credit – 15 percent • New applications for credit – 10 percent • Types of credit – 10 percent To Your Credit

  16. VantageScore • Was introduced in March 2006. • Three credit reporting agencies use the same scoring system. • Scores range from 501 – 990. • Grades A, B, C, D, F. To Your Credit

  17. Inquiries and Your Credit Score • When you apply for credit, you authorize the lender to ask for a copy of your credit report — an inquiry. • Your credit score may drop if you apply for new credit. • Most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. To Your Credit

  18. Other Reasons to Get a Free Credit Report You are also entitled to a free credit report if: • A company takes adverse action against you AND you ask for your report within 60 days of receiving notice of the action. • You are unemployed and plan to look for a job within 60 days. • You are receiving public assistance. • Your report is inaccurate because of fraud, including identity theft. To Your Credit

  19. Check for Errors • Review your credit report regularly to make sure there are no errors in it. • If you think there is an error, write a letter to the credit reporting agency. To Your Credit

  20. Identity Theft Identity theft occurs when thieves steal your personal information and use it to: • Open a new credit card account. • Write checks in your name. The unpaid credit card bills or bad checks can damage your credit history. To Your Credit

  21. Debt Management Plan It is NOT credit counseling. • You deposit money each month with the credit counseling organization. • Your creditors may agree to lower your interest rates or waive certain fees. • You must make regular, timely payments. To Your Credit

  22. The Truth About Credit Repair • No one can remove accurate information from your credit report. • It can take years to repair your credit. • No one can create a new identity for you. To Your Credit

  23. The Truth About Credit Repair (Continued) • Legitimate companies provide a service BEFORE requesting payment. • You can order your credit report yourself. To Your Credit

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