1 / 35

Welcome!

Test your mental agility by solving numeric puzzles and learn about credit scoring. Find distinct traits of numbers and solve a number sequence problem. Explore financial strategies for home purchase and consumer credit.

bernardok
Download Presentation

Welcome!

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Welcome! Home Purchase and Consumer Credit Scoring

  2. Mind Exercises Replace each dot with either 1, 2, 4, 5 or 6 to make the problem add up correctly. Each number can be used only once. 5 . . . + 8 7 4 3 1 . 3 5 . These numbers have many properties in common but do not share the same traits. Find seven different reasons for determining what makes one or more of these numbers distinct from the rest. 216 23 55 110 110 Add contiguous numbers (horizontally and vertically) so that they total 43. Each number may be used only once. 52 56 144 2 9 4 3 5 7 6 8 1

  3. Answers: 5612 +8743 14355 • 23 is the only prime number • 56 is the only multiple of 7 • 144 is the only square and the only multiple of 12 • 55 is the only one composed of one repeated digit • 110 is the only multiple of 10 • 216 is the only cube 1 + 3 + 6 + 8 + 5 + 7 + 4 + 9 = 43

  4. Welcome! Home Purchase and Consumer Credit Scoring

  5. Deuteronomy 28:8-13 • The LORD will send a blessing on your barns and on everything you put your hand to. The LORD your God will bless you in the land he is giving you. • The LORD will establish you as his holy people, as he promised you on oath, if you keep the commands of the LORD your God and walk in his ways. • Then all peoples on earth will see that you are called by the name of the LORD, and they will fear you. • The LORD will grant you abundant prosperity – in the fruit of your womb, the young of your livestock and the crops of your ground – in the land he swore to your forefathers to give you. • The LORD will open the heavens, the storehouse of his bounty, to send rain on your land in season and to bless all the work of your hands. You will lend to many nations but will borrow from none. • The LORD will make you the head, not the tail. If you pay attention to the commands of the LORD your God that I give you this day and carefully follow them, you will always be at the top, never at the bottom.

  6. The Order of Money • We TITHE Are you believing God for this primary step of stewardship? • We SOW Are you being obedient to financially sow into the kingdom of God? • We SAVE How much is in your savings account? If you save $25 per week, in 1 year you would have saved $1300. • We SPEND Is this the fourth step in your life?

  7. Strategy • If you are struggling financially, set a FOCUS goal and write it down. • I will own a house by XX/20XX • I will pay off my credit cards by X date • Be specific and deliberate in HOW you are going to achieve your goals • I will set up an automatic deduction to save $50 each week to use as my down payment on a house • I will pick 1 credit card and add $75 extra each month until it is paid off, then move to the next card • Set up a Budget • A guide to show where you are and where you want to go, not an unbreakable law • Managing your finances should not be a struggle. The financial areas of your life should be freeing, not restricting.

  8. What is the Latte Factor? Based on a simple idea, there’s a financial theory known as the Latte Factor. To put aside only a few dollars per day for your future, rather than purchasing items like lattes, cigarettes, fast food, bottled water, magazines, etc., an individual can see a difference in his/her finances by no longer living from one paycheck to another. The Latte Factor dictates than an individual can redirect the unnecessary spending to him/herself. Imagine being able to change your destiny by altering bad spending habits as well. The number one step is to identify your Latte Factor and how much it costs you per day. An individual can actually see how much he/she can save in several years.

  9. What is the Latte Factor? The Latte Factor calculator can be used to aid the individual to watch his/her savings increase. Coffee each day on average costs $3.00 $3.00 x 365 = $1095 Lunch each day on average costs $5.00 $5.00 x 260 = $ 1300 Don’t think you have to quit drinking coffee and quit eating lunch, just make changes to your spending habits. Buy a good coffee pot and pack your lunch. Excerpts taken from: Automatic Millionaire by David Bach

  10. What is your Latte? Take three minutes and write down a few items that you buy regularly that could be your Latte Factor. _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _______________________ ______________

  11. Purchase Programs • USDA (United States Department of Agriculture) • No money down • Can finance closing costs if home appraises high enough • Allows 6% seller assist • No PMI • Area Specific • FHA (Federal Housing Administration) • 3.5% down payment • Down payment can be a gift from a family member • Allows 6% seller assist • Conventional (Fannie Mae & Freddie Mac) • 5% down payment • Allows 3% seller assist

  12. Government Tax Credit for 2009 • 1st time home buyer • 10% of sales price with a maximum credit of $8,000 • File an amendment to your 2008 tax return and get the credit now • Expires 12/1/2009

  13. Useful Resources • www.annualcreditreport.com • 1 free credit report per year • All three credit reporting agencies • No credit scores • www.creditcards.com • If you need to establish credit, use this website to obtain a major credit card. • Do not apply for department store charge cards if you are trying to establish credit. • www.myfico.com • With their programs you can monitor your credit report and obtain your credit scores.

  14. What is Credit Scoring? • It’s the use of a statistical model to objectively evaluate all the credit information available in a single repository • There are three repositories in the US: • Equifax: Beacon Score • TransUnion: Emperica Score • Experian (FKA: TRW): Fair Isaac Score (FICO)

  15. What is a Credit Score? • A credit score can change daily. Anytime information is updated on a credit report your score changes. • 5 key parts we will discuss that make up your credit score. • How will knowing this help me?

  16. Your Credit Score Affects? • Mortgage loans • Homeowners insurance premium • Car insurance premium • Car loan rates • Instant credit card approvals • Employers- should I hire them or no? • Mortgage insurance

  17. Ranges of a Credit Score

  18. Millions of Americans have Inaccurate Credit Scores • December 17, 2003 Report by Consumer Federation of America and The National Credit Reporting Association showed… • Variance = 33% • 15k J = 34 points • How to fix errors? • Watch out for scams

  19. How the Credit Score Affects Loan Programs 660-850 620-659 600-619 580-599 540-579 500-539 300-499 No Score

  20. Top 5 Items Which Affect Your Credit Score

  21. Top 5 Items Which Affect Your Credit Score • 35% How you pay your bills • How often its late, how late it is and when was it late? The majority of focus is placed on last 2 years (most recent 11 months more sensitive with current lates most sensitive) Excluding BK and FC • Example: True or False: 30 day late 4 months ago will hurt your score more than a 30 day late 3 years ago. • Example: True or False: a current 30 day late will hurt your score more than a 30 day late 4 months ago • Example: True or False: a few 30 day lates 4 months ago will hurt your score more than a 90 day 26 months ago • Time frame items stay on your credit report

  22. Top 5 Items Which Affect Your Credit Score • 35 % How you pay your bills(continued) • Collections: Caution! (if old leave alone) • Collections: if purchased by another collection company it will hurt score (ITT, Household, Sherman Acq.) • Public records (judgments/liens/ bankruptcy etc)- same as bills. The severity and recently hurts score. (If its old leave it alone!) • Public records: use date of last activity • Stories of paying off collections or public records and score lowering?

  23. Top 5 Items Which Affect Your Credit Score • 30% Credit Utilization • The amount owed on all accounts • Revolving only: amount of current balances in relationship to high credit limit individually and collectively • The percentage owed on open installment loans • Amount owing on specific types of accounts

  24. Top 5 Items Which Affect Your Credit Score • 30% Credit Utilization(continued) • Do check your credit report annually and close any unused cards for security reasons • Ideally do keep 4-6 accounts open • Do use these accounts at least once every 6 months • Do try to keep your balances at 30% of high credit limit • Don’t open numerous accounts simply to try to increase your score • Don’t close old accounts just for your credit score • Don’t increase your credit limit just to achieve the 30% target to improve your score (your tempted to use it) • Bottom line is to show ability to manage credit

  25. Top 5 Items Which Affect Your Credit Score • 15% Length of credit history • Length of time account is open • Credit opened in the last 24 months viewed as a higher risk (risk increases if other negative factors) • Looks at the oldest time an installment account has been open (look at open date on credit report) • Looks at the oldest time a revolving account has been open • Looks at the average age of all accounts • Remember: needs opened 6 months and used once in last 6 months

  26. Top 5 Items Which Affect Your Credit Score • 10% Type of credit being used • Number of bankcards you have • Number of retail or department store cards you have • Number of installment accounts you have • Number of finance company loans you have • Excludes mortgages • What’s the ideal number (of open accounts) to have?

  27. Top 5 Items Which Affect Your Credit Score • 10% New credit/ Inquiries • New credit means: inquiries but also how long have you had accounts, how many new accounts and what types all play a factor. • Inquiries are a subset of new credit- yet the most notorious. • How many inquiries do you have? • Only consumer authorized inquiries count • Fact and myth of inquiries • What about rate shopping for mortgages or autos? • Impact of inquiries on 550 credit score vs. 750 credit score • See the facts

  28. How to Improve… • 35% How you pay your bills • Pay your bills on time • Look at the “windows” • Any currently “late pays” pay currentand re-score • Confirm any recent lates are correct • Leave old collections alone and why • Leave old public records alone • Watch small balances • Define late payment

  29. How to Improve… • 30% Credit utilization • Keep balances low vs. zero. The magic number is? • If your credit is recently new, don’t open a lot of new accounts • Utilize your cards how often? (to count) • Avoid “continual” balance transfers (double negative) • Don’t close all your unused credit cards • Don’t open unused credit cards to raise your score vs. balancing re-establishing with secured credit card

  30. How to Improve… • 15% Length of Credit History • Establish credit early in life • If your credit history is relatively recent, don’t open a lot of new accounts • Never rely on your spouse for all your families credit • Rotate usage of your credit cards • Watch out closing accounts (common error)

  31. How to Improve… • 10% Type of Credit • Finance company accounts can hurt your score. Why? • Watch out for 90 day same as cash • Paying cash for everything? • Apply and open new credit only as needed • Have credit cards, but manage them responsibly • FYI: closing out accounts doesn’t remove them from your credit report

  32. How to Improve… • 10% New Credit/ Inquiries • Do marketing inquiries count? • Best advice: have a old and strong credit file • Repeated inquiries with same company • Shopping for mortgages or auto (buffer period) • Shop for mortgages and auto loans within specific time period • Apply and open new credit only as needed • Request your credit report directly • Law in Affect

  33. How to Dispute Your Credit • Mistakes happen a lot! • How mistakes happen • Applied for credit under different names • Clerical error entering information • Person gave incorrect SSN • Payment was mistakenly applied to wrong account • Identity theft #1 in 2003 • In 2007 estimated losses of 49.3 Billion • Free dispute method • Rapid Re-scoring method

  34. Questions? Graph of 5 key components

  35. Thank you for coming!

More Related