Good vs bad credit
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Credit – the ability to borrow money and pay it back later. Good credit means: Lenders want to loan money to you because you have a history of paying money back on time and in full. You get more money offered and lower interest rates. Good vs. Bad Credit .

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Good vs. Bad Credit

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Good vs bad credit

  • Credit – the ability to borrow money and pay it back later.

  • Good credit means:

    • Lenders want to loan money to you because you have a history of paying money back on time and in full.

    • You get more money offered and lower interest rates.

Good vs. Bad Credit


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  • What does it mean to have bad credit?

    • Lenders don’t want to loan you money because you don’t pay your bills on time or in full.

    • Less money will be offered to you and your interest rate will be higher.

Good vs. Bad Credit


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  • How can you build good credit?

    • Maintain a balanced check book – no bounced checks

    • Consistently paying bills on time

    • Having no criminal history

    • Having a low number of credit cards

    • Checking credit score to remove any errors

Good vs. Bad Credit


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  • Building bad credit

    • Missing a payment

    • Not paying the minimum

    • Having a criminal record

    • Having too much available credit

    • Filing for bankruptcy

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  • Why is building a credit history important?

    • If you plan on making big ticket purchases in your life.

    • It will determine if you will get the loan, credit card, lease and what interest rate you will be charged.

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  • You do not build a credit history if…

    • You don’t have any credit in your name.

    • You pay cash for all major purchases

    • You don’t have loans

      Being late with a credit card or loan payment even once your credit report is impacted and will remain on your credit report for the next 7 years.

Good vs. Bad Credit


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  • What is a credit report?

    • A collection of facts about you that tells lenders whether you’re a good risk to lend money to

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  • What is part of your credit report?

    • Every loan/credit card you’ve applied for or received

    • Amount received

    • Monthly payments

    • If you’ve paid on time

    • If other lenders have asked to see your credit report

    • Your 3 digit FICO score

    • Employment history

    • Public records – criminal history

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  • What will your credit report determine?

    • If you get a loan

    • The interest rate you are charged on the loan

      The better your credit score the lower your interest

      rate and the more money you will ultimately save.

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  • Why is a good credit score important:

    • To get a mortgage

    • To finance home electronics/appliances

    • To get a car loan

    • To get a job

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  • FICO Score – tells lenders in a single number how credit worthy you are

    >750 excellent credit

    720-750 very good credit

    660-720 Acceptable credit

    620-660 uncertain credit

    <620risky credit

    http://www.youtube.com/watch?v=pAL7QTbay0o

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  • Your credit score is determined by:

    • 35% payment history – timely manner of paying bills.

    • 30% outstanding debt – amount of current debt

    • 15% credit history – amount of time you have held credit accounts and how often they are used

    • 10% pursuit of new credit - # of accounts opened in a time period.

    • 10% types of credit in use – credit cards, gas cards, store cards, loans

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Companies that publish credit report

Equifax

TransUnion

Experian

http://www.youtube.com/watch?v=uqKJyCgOQiw

Good vs. Bad Credit


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