© 2006 Consumer Jungle

Credit Scores & Reports

© 2006 Consumer Jungle

Learning Target

• I can explain what can affect my credit score and how to improve it.

© 2006 Consumer Jungle

Why Credit is Important

• FICO or credit score:• Credit Card Issuers &

Lenders– Determine APR

• Auto Insurers– Determine Premium

• Employers– Are you a worthy hire?

• Landlords– Are you a reliable tenant?

© 2006 Consumer Jungle

Credit / FICO Score

• Fair Isaac Company

• Range between 300 & 850

• U.S. Median: 723• < 620 = sub prime• > 760 = best rates

© 2006 Consumer Jungle

The Cost of Borrowing

Your Credit score:

Your interest rate:

Your monthly payment:

760 - 850 6.13% $1,313

700 - 759 6.35% $1,344

680 - 699 6.53% $1,369

660 - 679 6.74% $1,400

640 - 659 7.17% $1,462

620 - 639 7.72% $1,543

© 2006 Consumer Jungle

© 2006 Consumer Jungle

35% Payment History

• Late payments have the greatest negative impact.

• Recency & frequency are important too.

© 2006 Consumer Jungle

30% Outstanding Balances

• Total balance vs. total available credit.

• Are you overextended?

© 2006 Consumer Jungle

15% Length of Credit History

• Number of years you’ve used credit.

• How long since you’ve used certain accounts.

© 2006 Consumer Jungle

10% New Credit

• Number of new accounts.

• Multiple requests reduce your score.

© 2006 Consumer Jungle

10% Types of Credit

• Mix of:–Revolving Credit

• Credit cards– Installment

Credit• Car loan• Home loan

© 2006 Consumer Jungle

How to Improve Your Score

• Pay all bills on time.

• Pay any delinquent bills.

• Lower your total credit card debt.

© 2006 Consumer Jungle

How to Improve Your Score

• Don’t close unused credit cards.

• Don’t open up new credit cards to increase available credit.

© 2006 Consumer Jungle

How to Get Your Score

• Three Credit Scores– 1) TransUnion– 2) Experian– 3) Equifax

• $15.95 each

• $47.85 (all three & includes report)

• www.myfico.com or • 1-800-342-6726

© 2006 Consumer Jungle

How to Get Your Credit Report

• www.annualcreditreport.com

• 1-877-322-8228• 1 Free Report each year by each credit bureau:

– TransUnion– Experian– Equifax

• Order once from all three companies (or)• Order every 4 months from a different company

© 2006 Consumer Jungle

Your Credit Report

© 2006 Consumer Jungle

Selecting the Right Card

What if credit cards had a warning label on them?

What would they say??

Create a Warning Label

Include the following warnings:• May cause….• Use only for….• Do not use for….• Avoid….

Include A Picture!!!

In a consumer society there are inevitably two kinds of slaves: the prisoners of addiction

and the prisoners of envy.

-Ivan Illich (1926-2002)