Lets Talk Credit 100209TF

Let’s Talk Credit : 

Let’s Talk Credit

What Is Credit? : 

What Is Credit? A measure of an individual’s financial trustworthiness Most important factor lenders consider when you apply Many lenders offer better terms to consumers with good credit ratings Building a good credit record is important in reaching financial independence 2 Cambridge Credit Counseling Corp.

Why is Credit Important? : 

Why is Credit Important? Lenders use Credit Reports and Credit Scores to evaluate the risk an individual represents. Lending is a “risk-based” business Good credit = low risk Low risk = low interest rate 3 Cambridge Credit Counseling Corp.

What is your Credit History? : 

What is your Credit History? A credit report is a record that contains a consumer’s credit history Three major credit bureaus: TransUnion, Equifax, and Experian Information from reports are used to create Credit Scores 4 Cambridge Credit Counseling Corp.

Take a Deep Breath! : 

Take a Deep Breath! You can improve your credit with determination and a sound financial plan! If your credit is poor, it won’t necessarily remain that way forever Credit reports and scores are very time-sensitive items Current score is a snapshot of your profile at any given point in time 5 Cambridge Credit Counseling Corp.

Consequences of Poor Credit : 

Consequences of Poor Credit 6 You may not qualify for a loan. You may be charged a higher interest rate on loans or credit accounts. Your car insurance policy may not be renewed. You may not be able to lease the apartment you want. You may not get the job you want. Cambridge Credit Counseling Corp.

Credit Reports : 

Cambridge Credit Counseling Corp. 7 Credit Reports

What Your Report Says : 

What Your Report Says Credit Reports are track records of how you manage your credit obligations. Personal Information Credit History Public Records Inquiries 8 Cambridge Credit Counseling Corp.

Is a Free Credit Report Really Free? : 

Is a Free Credit Report Really Free? We have all seen the entertaining ads promoting free credit reports, but are they really free? Recently, the Federal Trade Commission launched a new campaign for AnnualCreditReport.com, the only authorized source for free credit reports, to educate the public on the differences between these websites. 9 Cambridge Credit Counseling Corp.

Ordering your Credit Reports : 

Ordering your Credit Reports Online: www.annualcreditreport.com Telephone: 877-322-8228 Mail: Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281 Your must download form from www.ftc.gov/credit 10 Cambridge Credit Counseling Corp.

Review Your Reports : 

Review Your Reports It is your responsibility to ensure your reports are correct. You should review each of your reports once a year Remove outdated information Check for Identity Theft Correct any errors 11 Cambridge Credit Counseling Corp.

Check Your Credit Reports : 

Check Your Credit Reports 12 Cambridge Credit Counseling Corp.

Disputing Inaccurate Information : 

Disputing Inaccurate Information Your dispute should be in writing and contain: Your complete name and address A clear identification of each item in dispute An explanation as to why you dispute the information A request that an investigation be initiated 13 Cambridge Credit Counseling Corp.

Remember to… : 

Remember to… Some recommendations when initiating an investigation. Be sure to include copies of documents that support your claim You may wish to enclose a copy of your report with the items in question notated Send your letter by certified mail, return receipt requested Keep copies of your dispute letter and enclosures for your records 14 Cambridge Credit Counseling Corp.

The Dispute Process : 

The Dispute Process 15 By law, the agency must investigate each item, usually within 30 days Agency will work with information provider to determine if dispute is valid If disputed information is inaccurate, information provider must notify all credit-reporting agencies If the investigation does not resolve the dispute, you have the right to add a 100-word statement to your file Cambridge Credit Counseling Corp.

Credit Scores : 

Cambridge Credit Counseling Corp. 16 Credit Scores

Credit Scores : 

Credit Scores FICO Score: On the web at myFico.com. VantageScore: On the web at vantagescore.com Numerical calculation that illustrates the risk you represent Three digit number based upon you credit report. High scores = less risk Low scores = high risk 17 Cambridge Credit Counseling Corp.

Various FICO Model Names : 

Various FICO Model Names Credit reporting agencies own proprietary formulas. Equifax: Beacon Score Experian: Experian/Fair Isaac Risk Model Score TransUnion: Empirica Score 18 Cambridge Credit Counseling Corp.

Fico Scores : 

19 Fico Scores 780 & up: A+ Credit 720 – 779: A Credit 675 – 719: A- Credit 620 – 674: B Credit 560 – 619: C Credit 500 – 559: C- Credit 499 & below: D Credit Cambridge Credit Counseling Corp.

What Makes Up Your FICO Score? : 

What Makes Up Your FICO Score? 20 Cambridge Credit Counseling Corp.

VantageScores : 

21 VantageScores A Credit: 901-990 B Credit: 801-900 C Credit: 701-800 D Credit: 601-700 F Credit: 501-600 Cambridge Credit Counseling Corp.

What FICO 08 Means to Your Credit Score : 

What FICO 08 Means to Your Credit Score In 2007, FICO began the process of overhauling its scoring model to better predict the risk represented by consumers. Roughly two years later, FICO 08 was released. 22 Cambridge Credit Counseling Corp.

What Makes Up Your Vantage Score? : 

What Makes Up Your Vantage Score? 23 Cambridge Credit Counseling Corp.

To Get Credit, You Need Credit?!? : 

To Get Credit, You Need Credit?!? Typically, a mortgage lender will want to see 2 to 3 lines of performing credit. These can be a combination of… Credit cards Installment loans Car payments, etc… 24 Cambridge Credit Counseling Corp.

What If You Have No Credit? : 

What If You Have No Credit? Don’t worry, new services can help you establish a credit profile. Expansion Scores As with traditional FICO scores, the expansion scores range from 300 to 850 Deposit account records, payday loan cashing, and purchase payment plan performance Payment Reporting Build Credit Rent, Cable, Phone, Insurance, Electric, Cell Phone On the web at www.prbc.com 25 Cambridge Credit Counseling Corp.

Improving Credit : 

Cambridge Credit Counseling Corp. 26 Improving Credit

Hurting Your Credit : 

Hurting Your Credit With so many things riding on your credit profile, you owe it to yourself to keep it in good shape. These days, everyone from insurance companies to potential employers review credit reports to measure creditworthiness. Therefore, doing the best you can to maintain a positive standing is important. 27 Cambridge Credit Counseling Corp.

Less Reliance on Credit : 

Less Reliance on Credit The single most important thing an individual can do is develop a Spending Plan Plan is directed by the goals you develop and your financial resources Simplistic approach to review spending habits 28 Cambridge Credit Counseling Corp.

Improving Credit : 

Improving Credit Start planning today for good credit tomorrow! Pay off debt rather than move it around Don’t close unused or old credit cards as a short-term strategy Don’t open a number of new credit cards that you don’t need Don’t open a series of new accounts in a short period of time Re-establish your credit history if you have had problems in the past 29 Cambridge Credit Counseling Corp.

Building Credit : 

Building Credit Re-establish your credit history if you’ve had problems in the past. Opening new accounts responsibly and paying them off on time will help raise your score. It’s okay to have credit cards, but you must manage them responsibly! In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be a higher risk than someone who has managed credit cards responsibly. 30 Cambridge Credit Counseling Corp.

Building Credit : 

Building Credit Strategic Debt: A good way to rebuild credit is to open a savings account at a bank that provides personal loans. Once the account is open, you can take a loan against your deposit. It is important that you verify the bank reports these loan payments to the credit reporting agencies, otherwise you won’t be credited for timely payments. 31 Cambridge Credit Counseling Corp.

Building Credit : 

Building Credit Manage Your Income: In order to know where you’re going, you need to know where you started. Budgeting allows you to examine your spending and make the necessary changes to ensure your money is spent wisely. 32 Cambridge Credit Counseling Corp.

Ask The Hard Questions : 

Ask The Hard Questions These strategies will help you rebuild a positive profile, but learning how to keep it that way is important. You must analyze the way your credit deteriorated in the first place. This will take time, patience and honesty. 33 Cambridge Credit Counseling Corp.

Improving Credit Takes Time : 

Improving Credit Takes Time Unfortunately, negative items tend to affect your credit score much more quickly than positive items. Late payments can negatively affect your score in just a few months, whereas paying bills on time may take 6 to 12 months to generate a significant improvement in your score. The best course of action is to adopt healthy credit habits and maintain them. 34 Cambridge Credit Counseling Corp.

Collections : 

Cambridge Credit Counseling Corp. 35 Collections

Who are you dealing with? : 

Who are you dealing with? Important for individual to determine if they are corresponding with Original Lender Collection Agency Dealing with an original lender can be favorable Collection agencies, on the other hand, have little interest in a persons financial future Cambridge Credit Counseling Corp. 36

Your rights : 

Your rights The Fair Debt Collection Practices Act (FDCPA) protects consumers in the event that their accounts become delinquent and subject to collections. Not in the accountholders best interest to try to out-slick the slicksters Federal law differentiates between third-party collectors and lenders attempting to collect their own debt One of the most important aspects of the act is the disclosures that are required to be presented when collection activities begin Cambridge Credit Counseling Corp. 37

So, It Begins : 

So, It Begins When dealing with collection calls, it is important to keep in mind that a collection call is just that - a phone call Collectors already have an understanding of the situation someone who is delinquent faces Collectors will use these feelings against an individual to achieve their goals – getting payment Cambridge Credit Counseling Corp. 38

Aggressive Debt Collectors : 

Aggressive Debt Collectors While the climate might seem ripe for the collection industry to cash in on troubled account-holders, problems in the housing and employment markets have actually made their jobs a lot tougher. As a result, the tactics used by some collectors have become more aggressive. 39 Cambridge Credit Counseling Corp.

Harassment : 

Harassment The best course of action when subjected to such abuses is to hang up the phone and document such abuses. Collectors are forbidden from harassing or abusing individuals or any third parties they may contact. Examples of restricted behavior is as follows: Threatening violence, Use of profanity, or Making continuous telephone calls. Cambridge Credit Counseling Corp. 40

Collection Activities : 

Collection Activities Cambridge Credit Counseling Corp. 41 An agency can contact a debtor in person, by mail, telephone, or fax May not contact someone at inconvenient times, typically before 8 a.m. or after 9 p.m. May not contact an individual’s place of employment if they know their employer does not allow for personal calls Must contact an individual directly unless the agency has been informed that an attorney is representing the debtor May also contact a debtor's friends, family and neighbors to verify the individuals contact information

Cease and Desist : 

Cease and Desist Be careful when communicating with collectors. Debtors do have the right to request that collectors cease from contacting them Once the collector receives such a request to cease communications, they may not contact the individual again The debt collector or original lender may still have the right to file a lawsuit against the debtor and it is likely they will do so in a situation 42 Cambridge Credit Counseling Corp.

What Can Collectors Say? : 

Cambridge Credit Counseling Corp. Implying that they are attorneys when they are not Implying that the debtor has committed a crime Falsely representing that they operate or work for a credit bureau Misrepresenting the amount of the debt owed Indicating that papers being sent are legal forms when they are not, or Indicating that papers being sent are not legal forms when they are A debtor will be arrested if they do not pay the debt They will seize, garnish, attach, or sell property or wages, unless the collection Actions, such as a lawsuit, will be taken against the debtor when such action may not legally or intended 43 What Can Collectors Say?

Unfair Practices : 

Unfair Practices Collectors may not use deceptive practices Collect any amount greater than the debt, unless state law permits such a charge Deposit a postdated check prematurely Use deception to make the debtor accept collect calls Contact the debtor by postcard 44 Cambridge Credit Counseling Corp.

Violations to the FDCPA : 

Violations to the FDCPA If someone feels as though their rights have been violated in relation to the act, they do have options Document all instances of unfair treatment Collector’s name, company, time of a call and summary of conversation may suffice Formal complaint should be lodged with the Federal Trade Commission, the State’s Attorney General’s Office and any other applicable state agency May wish to inform their original lender as to the actions of these aggressive collection agencies 45 Cambridge Credit Counseling Corp.

Making a plan : 

Making a plan At the core of a debtors plan to deal with collection activities is prioritizing which of their bills they need to pay. This will help someone determine what will be leftover to satisfy collectors. Plan is driven by an Initial Budget When dealing with bill collectors, one will use their discretionary income to develop a repayment plan If these funds are insufficient, or even in the negative, further reduce nonessential expenses or increase income. Remember, essential bills are those that must satisfy shelter, food and transportation. Debtors should never forgo their rent or mortgage payment to “get a collector off their back” 46 Cambridge Credit Counseling Corp.

Dealing with Collection Accounts : 

Dealing with Collection Accounts Cambridge Credit Counseling Corp. 47 Once it has determined that sufficient funds are available, one should begin to contact collectors to work out repayment plans Collectors would want their demands to be the debtors top priority; however, proceed with caution when heeding the cries of debt collectors The better prepared an individual is to deal with collector tactics, the better they will fare One should always approach each attempt to collect a debt seriously, and remain calm Maintaining composure and a comfortable level of honesty can make all the difference in repaying obligations and reestablishing credit

First thing’s first. : 

First thing’s first. When the debtor is in the position to negotiate repayment, their first point of contact should be their original lender, unless the account has already been sold to a collection agency. When contacting the original lender, the request should be made that they recall the debt so that repayment may be worked out directly One of three things can happen 1) they agree, 2) they refuse, or 3) they do both 48 Cambridge Credit Counseling Corp.

The “Truth” : 

The “Truth” Cambridge Credit Counseling Corp. 49 It has been said that honesty is the best policy Do not share current employer, one’s income, or even the amount owed Avoid any agreements that cannot be maintained. Collectors would still try to elicit payment even after it has been communicated this is currently not feasible. Behind on multiple accounts they will need to divide their available funds among the obligations

Beyond collections : 

Beyond collections Unfortunately, though the most noble of efforts have been put forth, debtors may be unable to come to an agreement with collection agencies Lawsuits are quite serious; so much so, legal counsel may be needed if the debt in question is substantial Debtors who cannot afford counsel should not panic It is important to understand that the court clerk, judge or any other official involved in the case will not be in the position to offer any legal advice Once served with a summons, the defendant will need to provide an answer to the complaint DO NOT IGNORE THE COURT DATE 50 Cambridge Credit Counseling Corp.

Judgments : 

Judgments Cambridge Credit Counseling Corp. 51 A judgment is a finding though the courts that the debt owed is valid Judgments are very serious, and permit collectors to legally take a debtors property and even their wages Typically, a creditor will enforce a judgment in three ways – liens, levees or wage attachments A lien on property means that before a sale or refinancing, the creditor must first be satisfied Levees work in a similar fashion to liens – law enforcement will seize property and offer it for auction, if applicable Garnish an individual's wages for a period of time until the debt is satisfied

Recommendations : 

Recommendations The legal process can be complicated, so it is recommended that individual’s conduct research regarding the specifics of collection suits in their state May even want to speak with an attorney to receive a better understand of their rights Remember, the collector’s sole purpose is to collect the monies due to them; so offering a settlement on the debt at any point in the legal process can halt the creditors actions Should the collector accept a settlement, they should be verified that the case would indeed be dismissed 52 Cambridge Credit Counseling Corp.

Questions? : 

Questions? 53 Cambridge Credit Counseling Corp.