SCORE SOME POINTSUNDERSTANDING AND RAISING YOUR CREDIT SCORE

2

Welcome!

Introductions

Objective:

Learn about the importance of credit scores, what is a credit score, what impacts your score, and what actions you can take to raise it.

3

Nearly 80% of credit reports

contain an error!

25% of credit reports contain at least one

serious error!

Source: Federation of State Public Interest Research Groups

4

Why our credit score matters

It comes into play whenever we try to:• Get a mortgage• Rent a house or apartment• Buy or lease a car• Secure a credit card• Apply for a job

5

What’s a credit score, anyway?

A rating to indicate how much credit risk we pose

Used by lenders, insurance companies, landlords and employers

6

FICO® scores

FICO® Fair, Isaac and Company Developed the software used by most credit bureaus to calculate a credit

score

FICO® scores is the most commonly used credit rating

Credit scoring is a quick, objective & consistent method for lenders to measure the “risk” of an applicant Scores based solely on information in consumer credit reports

maintained at the credit reporting agencies (Experian, TransUnion & Equifax)

The higher the score, the lower the risk, a FICO score is a constant work in progress

7

Credit Score Scale Chart

Credit Score Rating

760-850 Excellent

700-759 Great

660-699 Good

620-659 Fair

580-619 Poor

579 and below Very poor

8

Factors behind each score

Payment history 35%

Amounts owed 30%

Length of credit history 15%

New credit 10%

Types of credit in use 10%

9

The higher our credit score, the lower our loan payments

30-year fixed mortgageLoan amount $200,000

Credit score Annual percentage rate

(national average)

Monthly payment

760-850 4.419% $1,004700-759 4.641% $1,030

680-699 4.818% $1,052

660-679 5.032% $1,078

640-659 5.462% $1,131

620-639 6.008% $1,200

Source: myfico.com – rates as of 1/25/11; for illustrative purposes only

($196 more than the lowest monthly payment or $70,560 over the life of the loan)

10

Personal Action Plan

Action Step When Done

Action Item!Create your own Personal Action Plan throughout this presentation.

11

1. Check our credit reports

Once every 12 months, get a free copy of your credit report from each major agency

Check reports before applying for a new job, mortgage or other big loan

Dispute errors with the Credit Reporting Agency (CRA) and the lender

• Go to AnnualCreditReport.com or 1-877-322-8228• Tip: order a free report from a different agency every four months

12

2. Know our score

At least once a year, when ordering one of your free reports from one of the Credit Report Agencies, also buy one of your credit scores

Or, buy your credit scores anytime at myFICO.com

13

3. Raise our score

Payment History – 35% • Pay bills on time• Get current and stay current

Amount Owed – 30% • Pay down debt do not shift it• Installment is better than revolving

Length of Credit History – 15%• Keep long-running credit card accounts open• Avoid opening a lot of new accounts within a short time frame

14

3. Raise our score (continued)

Types of Credit in Use – 10% • Maintain a good mix of credit• Apply for only what you need

New Credit – 10% • If we’ve had problems, re-establish our credit history• Avoid opening new accounts that we don’t need• It’s ok to check your credit

Fix errors on credit reports

15

4. Monitor our reports and scores regularly

Every four months, order a free credit report from one agency

At least once a year, buy your credit score from one agency

Take action, if necessary

16

Credit Reporting AgencyContact Info

AnnualCreditReport.com or 1-877-322-8228

Equifax.com or 1-800-846-5279

Experian.com or 1-888-EXPERIAN (397-3742)

TransUnion.com or 1-800-888-4213

myFICO.com

17

Personal Action Plan

Action step When Done

Close at least 1 unused credit card Next 3 days

Check your credit report and credit score from at least one agency

Next 7 days

Take action to start raising your score Next 14 days

18

Questions?

?

???

??

?

?

??

??

??

?

19

Charter One Legal Disclaimer

The information presented in these materials are intended and written to be educational only. This presentation is not intended or written to be relied on for tax or legal advise. We are not in the business of providing tax or legal advice. Please seek advise based on your particular situation from an independent  tax or  legal advisor.

Member FDIC. Equal Housing Lender.  Charter One  is RBS Citizens, N.A.