# Money Math for Teens. Credit Score

Size: px
Start display at page:

## Transcription

1 Money Math for Teens

2 This Money Math for Teens lesson is part of a series created by Generation Money, a multimedia financial literacy initiative of the FINRA Investor Education Foundation, Channel One News and America Saves. Special thanks to Rudy Gawron for preparing the lesson and to Jill Sulam of Transformations Editing LLC for editorial guidance. Money Math for Teens. Copyright 2014 by the FINRA Investor Education Foundation or FINRA Foundation. Reproduction for nonprofit, educational purposes is permitted and encouraged. All rights reserved.

3 Lesson Plan OBJECTIVE To inform students about credit scores, the benefits of having a good score and pitfalls they may encounter regarding credit and credit scores. The overarching goal is to guide students toward responsible financial habits. Students will be able to: Describe the five major components that make up a credit score Describe the benefits of having a good credit score Describe positive and negative behaviors that affect a credit score Use the monthly payment formula to calculate the monthly payments necessary to pay off a debt in a predetermined period of time Calculate the payment schedule for a decreasing loan. TEACHING MATERIALS Lesson plan with answer key for student assessment student handout Analytical Exercises worksheet with solutions Student assessment worksheet LESSON ACTIVITY 1. Determine students prior knowledge by asking the following suggested questions: What exactly is a credit score? How can a good credit score benefit you? How can a good score turn bad? How can a bad score hurt you? What is the most important thing you can do to protect and/or improve your credit score? 2. Introduce the student handout. Definition of credit score Benefits of using credit scores in lending decisions How can a good credit score benefit you? How is a credit score determined? The FICO 5: weighted components of a credit score (payment history, amounts of debt, length of credit history, new credit, credit type mix) How bad credit decisions can cost you The role of credit reports in getting hired for a job Tips for building and maintaining good credit. 1 Introduction

4 3. Work through the Analytical Exercises worksheet with students. How to calculate a monthly payment using the monthly payment formula Car purchase payment example Now You Try: car purchase payment exercise Using a credit card as an installment loan How to calculate the loan payoff month by month What happens if you continue to charge on the card? What happens if you continue to charge too much on the card? Now You Try: discover the effects of charging too much on a card while trying to pay the balance off Financing a major purchase without damaging your credit score Using multiple credit accounts, decide how best to structure a purchase to protect your credit score and improve it if possible Additional computation exercise: monthly payment needed to pay a balance down to \$0 Additional analytical exercise: improving a credit score while paying down three debts. 4. Evaluate students comprehension (see assessment worksheet). Assessment Answer Key 1. C 2. D 3. C 4. A 5. B 6. D 7. D 8. C 9. C 10. A 2 Introduction

10 Notice that the higher the customer s credit score, the lower the interest rate the lender will charge for the same loan. Customers with FICO scores of represent the absolute lowest risk to the lender. The further down the FICO scale a customer s score falls, the higher risk that person is, so financial institutions will try to offset the higher risk by charging a higher rate. What does this mean for customers? Over the life of the loan, a customer with a lower credit score will pay considerably more interest on the same loan than a customer with a higher credit score. FICO Score Interest Rate Monthly Payment Total Interest Paid % \$773 \$2, % \$784 \$3, % \$804 \$3, % \$827 \$4, % \$869 \$6, % \$879 \$6,640 You can see that a customer with a great credit score pays \$773 per month and a total of \$2,843 in interest over the three years of the loan. A customer with a credit score in the lowest range pays \$106 more per month and \$3,797 more in interest for the exact same loan. Ouch! Getting Hired Many companies use credit reports as criteria when making employment decisions. They seem to believe that a credit score is a more reliable and more unbiased source of information about a potential employee than his or her references. A good credit score can be an indicator of responsible behavior, showing that the job candidate can be trusted around money and other sensitive information. A bad credit score can signal potential for irresponsible behavior and overall untrustworthiness. Fair or not bad things do happen to good people more and more companies are pulling credit on potential employees. A candidate s credit score can be a more significant factor in hiring decisions for certain types of jobs. Credit scores are likely to be a heavily weighted factor for jobs that require financial responsibility senior management, accounting, payroll, or any other position where the employee needs to be trusted with sensitive and confidential information. 8 Student Handout: What Is a, and Why Should I Care What Mine Is?

12 Analytical Exercises Monthly Payments It s helpful to know how to calculate a monthly payment on a loan balance. This will tell you how much you ll need to pay each month to pay off your debt over a certain period of time. The formula to calculate the monthly payment on an original principal loan amount (P) at an annual interest rate (I) that will be necessary to pay the entire loan off in N months is: (P x (I 12)) Monthly Payment = (1 - (1 +(I 12)) -N ) P = Principal amount of the loan I = Interest rate of the loan N = Number of months to pay off the loan Let s try it out. A buyer wants to purchase a \$25,0 automobile at 6% interest and pay the loan off entirely in three years. P = 250 I = 6% = 0.06 N = 3 years = 36 months Now use the formula: Monthly Payment = (250 x ( )) = 250 x 0.5 (1 - (1 +( )) -36 ) (1 - ( ) -36 ) = = = \$ (1 - (1.5) -36 ) ( ) The monthly payment will be \$ Did you get the same answer? Now You Try You are deciding if you can afford to take on \$8,0 in new debt at an annual interest rate of 11%. You want to pay this debt off in 2.5 years. What will your monthly payment be? P = 80 I = 11% = 0.11 N = 2.5 years = 30 months Your monthly payment will be \$ Analytical Exercises

13 Using a Credit Card as an Installment Loan Let s say you decide to use a credit card like you would an installment loan. You ll make a large purchase on the card, creating a balance. Then, you won t use the card again until the entire balance is paid off. The following examples will help you understand why you don t use the card again. Option A: No Longer Using the Card I create a \$3,0 balance on a credit card that has an 11% interest rate. I can afford to make equal monthly payments of \$1 per month. I don t use the card again after creating the \$3,0 balance. Let s see how my \$1 payments are being used: 1st month \$3,0 x 11% = 30 x 0.11 = \$330 in interest per year 330/12 = \$27.50 interest for the 1st month When I pay my 1st month s \$1 payment, the credit card company takes \$27.50 in interest = \$72.50 applied toward the loan balance This means that \$72.50 of my \$1 payment will pay down what I owe = \$2, balance 2nd month \$2, x 11% = x 0.11 = \$ in interest per year /12 = \$26.84 interest for the 2nd month When I pay my 2nd month s \$1 payment, the credit card company takes \$26.84 in interest = \$73.16 applied toward the loan balance = \$2, balance 3rd month \$2, x 11% = x 0.11 = \$ in interest per year /12 = \$26.17 interest for the 3rd month When I pay my 3rd month s \$1 payment, the credit card company takes \$26.17 in interest = \$73.83 applied toward the loan balance = \$2, balance 11 Analytical Exercises

14 The table below shows the numbers for the first three payments: Payment Interest Paid Principal Paid Balance Month 1 \$27.50 \$72.50 \$2, Month 2 \$26.84 \$73.16 \$2, Month 3 \$26.17 \$73.83 \$2, As each month passes and each payment is made, notice how the amount of interest paid gets smaller each month. This happens because once the \$1 payment is made and the interest due is taken from that payment, the rest of what s left of the \$1 is used to pay back the loan balance. Since the amount owed gets smaller, the amount of interest due gets smaller, too. Each month, more and more of the \$1 payment is used to pay back the loan and less and less is needed to pay interest due. If you keep doing the monthly calculations until the loan balance is 0, you ll see that it takes 36 months (3 years) to pay the loan off completely, and you will end up paying \$ in total interest. The most important thing to notice about the previous example is that the \$1 payment is enough to pay the interest due each month with some money left over to pay down the loan balance. Since you aren t continuing to use the card, the balance gets smaller and smaller each month. But what if you continue to use the card? Looking at the 1st month s payment in the example table, we see the \$1 payment is divided up. Part of it \$27.50 is interest, while the remaining \$72.50 goes to pay down the loan balance. The balance decreases each month. However, if you continued to use the card for purchases and charged more than \$72.50 in a month, the balance of the loan would increase, not decrease, because the \$1 payment you re able to make won t cover the new charges and the interest owed on the previous month s balance. So the next month you d owe more interest than the month before, not less. Below is a specific example of what would happen to your monthly payments if you charge on the card, adding to your existing balance. 12 Analytical Exercises

15 Option B: Continuing to Use the Card I create a \$3,0 balance on a credit card that has an 11% interest rate. I can afford to make equal monthly payments of \$1 per month. I continue to use the card, charging an additional \$50 per month. Let s see how my \$1 payments are being used: 1st month \$3,0 + \$50 new charges x 11% = 3050 x 0.11 = \$ in interest per year /12 = \$27.96 interest for the 1st month When I pay my 1st month s \$1 payment, the credit card company takes \$27.96 in interest = \$72.04 applied toward the loan balance = \$2, balance 2nd month \$2, \$50 new charges x 11% = x 0.11 = \$ in interest per year /12 = \$27.76 interest for the 2nd month When I pay my 2nd month s \$1 payment, the credit card company takes \$27.76 in interest = \$72.24 applied toward the loan balance = \$2, balance 3rd month \$2, \$50 new charges x 11% = x 0.11 = \$ in interest per year /12 = \$27.55 interest for the 3rd month When I pay my 2nd month s \$1 payment, the credit card company takes \$27.76 in interest = \$72.45 applied toward the loan balance = \$2, balance 13 Analytical Exercises

16 The table below shows the numbers for the first three payments: Payment Interest Paid Principal Paid Balance Month 1 \$27.96 \$72.04 \$2, Month 2 \$27.76 \$72.24 \$2, Month 3 \$27.55 \$72.45 \$2, Compare this table with the table in the previous example, when you didn t use the card for any new spending. Luckily, the \$1 payment is still enough to pay the interest due, and the loan balance is still getting smaller but it is coming down at a much slower rate. If we continued our calculations, it would take 89 months (7.4 years) to pay this loan completely off, and you will end up paying \$1, in total interest. Spending just \$50 a month on the card means that it will take 53 months (about 4.4 years) longer to pay off the loan, and you will spend \$ more in interest. 14 Analytical Exercises

17 Now You Try Can you predict what would happen to the exact same loan with the exact same \$1-per-month payment if you continue to use the card and charge \$1 per month in new charges on it? Answer Payment Interest Paid Principal Paid Balance Month 1 \$28.42 \$71.58 \$3, Month 2 \$28.68 \$71.32 \$3, Month 3 \$28.94 \$71.06 \$3, In this scenario, interest rises every month as the principal reduction falls, which means that the balance grows every month. The balance gets bigger and bigger every month, and so does the amount of interest owed. This loan can never be paid off! Financing a Major Purchase without Damaging Your You are currently carrying a \$2,0 balance on a credit card with an annual interest rate of 9%. In order to pay this debt off in 2.5 years (30 months), you are currently making a monthly payment of \$ Your credit limit is \$15,0. You are deciding how to finance an \$8,0 purchase. Will this new purchase fit within your existing credit limit? Will financing an \$8,0 purchase have any impact on your credit score? How and why? Your credit score is currently very good, so you have a couple of offers for new credit. One offer is for an installment loan at the same 9% rate. The credit limit is \$8,0. You also have an offer for a card at 11% with a credit limit of \$15,0, the same as your existing card. So: Option A = installment loan with 9% rate, credit limit \$8,0 Option B = credit card with 11% rate, credit limit \$15,0 Would you choose Option A with the lower rate or Option B with the higher credit limit? Why? 15 Analytical Exercises

21 On Card B, he s using 42/50 = 0.84 = 84% of his available credit. This is way too high and will cause his credit score to fall. On Card C, he s using 33/50 = 0.66 = 66% of his available credit. This also is way too high and will cause his credit score to fall. Between Cards B and C, Card B is the bigger problem. I would advise my friend to focus on paying off Card B, then Card C. Card B can be paid off in 12 months by making a monthly payment of \$ Because my friend still has \$580/month to work with after making a \$20/ month payment on Card A, I would advise him to use \$ of the \$580 to pay Card B. This would leave \$ to pay off Card C. At that rate, how long will it take him to pay off Card C? It would cost \$288.59/month to pay it off in 12 months. He doesn t have that much money to use for payments. It would cost \$249.19/month to pay it off in 14 months. He doesn t have that much money to use for payments. It would cost \$219.64/month to pay it off in 16 months. He doesn t have that much money to use for payments. It would cost \$196.67/month to pay it off in 18 months. He can pay this amount, with \$14.08 ( ) left over. He can put the leftover \$14.08 toward paying off Card A to decrease that balance while he focuses on Cards B and C. Therefore, I would advise my friend to pay \$34.08 on Card A, \$ on Card B and \$ on Card C every month. This will eliminate his balance on Card B in 12 months and Card C in 18 months and will reduce Card A s balance in those 18 months. 19 Analytical Exercises

22 Name Date Student Assessment: Understanding s Now that we ve removed the mystery surrounding credit scores, let s see how well you recall the most important facts. You may need the following formula to answer some of the questions. (P x (I 12)) Monthly Payment = (1 - (1 +(I 12)) -N ) P = Principal amount of the loan I = Interest rate of the loan N = Number of months to pay off the loan 1. What is a common name for a person s credit score? A. Credit risk index B. Credit evaluation index C. FICO score D. Credit limit 2. Name one way a good credit score can benefit you: A. Better loan rates B. Better car insurance rates C. Better job opportunities D. All of the above 3. Which of the following components used to determine a credit score counts most when determining that score? A. Debt to available credit ratio B. Length of credit history C. Payment history D. Number of recent credit inquiries 20 Student Assessment

23 Name Date 4. What would the monthly payment be on a \$4,2 debt at 14.99% interest if you wanted to pay the debt completely off in 42 months? A. \$ B. \$1. C. \$ D. \$ How much of the monthly payment on a \$4,2 debt at 14.99% interest would be used to pay the interest for the 1st month if the loan term is 42 months? A. \$ B. \$52.47 C. \$ D. \$ What would be considered the ideal debt-to-available-credit ratio? A. 50% or more B. 33% or more C. 50% or less D. 33% or less 7. How could opening several new credit accounts all at the same time affect your credit score? A. It helps: it says I can handle lots of new credit B. It hurts: it says I had too little credit to begin with C. It helps: it says I had too little credit to begin with, but now I have the correct amount D. It hurts: it says I may be in trouble and need lots of help to stay afloat 8. Which is the best way to carry a \$9,0 debt? A. On a single account with an \$18,0 credit line B. Split evenly across two accounts with \$10,0 credit lines each C. Split into thirds across three accounts with \$9,0 credit lines each D. On a single account with a \$9,0 credit line 21 Student Assessment

24 Name Date 9. Would it be easier on your budget to pay off a \$4,2 debt at 14.99% interest in 42 months, or \$4,2 at 17.5% interest in 60 months? A % for a shorter time has got to be better than 17.5% for longer B. A longer loan term means I would pay lots more interest over the term of the loan, so the option to pay 14.99% for 42 months would be better C. The longer-term loan results in a lower monthly payment, so it would be easier on my budget D. Always pay less interest; choose 14.99% for 42 months 10. What is the single best thing you can do to help build a good credit score and to keep it once you have it? A. Pay my bills on time B. Keep balances on all accounts low C. Take out only the credit I need when I need it D. Pay cash 22 Student Assessment

### What is a Credit Score and Why Do I Care What It Is?

What is a Credit Score and Why Do I Care What It Is? Your Credit Score is a lot like the score you get on a test. You get points for good credit decisions and behavior and you get points taken away for

Understanding Your Credit Score Contents Your Credit Score A Vital Part of Your Credit Health...... 1 How Credit Scoring Helps You........ 2 Your Credit Report The Basis of Your Score............. 4 How

Understanding Your Credit Score Contents Your Credit Score A Vital Part of Your Credit Health...... 1 How Credit Scoring Helps You........ 2 Your Credit Report The Basis of Your Score............. 4 How

### Understanding Your FICO Score. Understanding FICO Scores

http://www.myfico.com/crediteducation/creditscores.aspx About your credit score Your credit score influences the credit that s available to you and the terms (interest rate, etc.) that lenders offer you.

Understanding Your Credit Score Contents An Introduction to Credit Scores...... 1 How Credit Scoring Helps You........ 2 Your Credit Report The Basis of Your Credit Score........ 4 How Scoring Works................

### Money Math for Teens. Before You Choose a Credit Card

Money Math for Teens Before You Choose a Credit Card This Money Math for Teens lesson is part of a series created by Generation Money, a multimedia financial literacy initiative of the FINRA Investor Education

### Loan Lessons. The Low-Down on Loans, Interest and Keeping Your Head Above Water. Course Objectives Learn About:

usbank.com/student financialgenius.usbank.com Course Objectives Learn About: Different Types of Loans How to Qualify for a Loan Different Types of Interest Loan Lessons The Low-Down on Loans, Interest

Understanding Your Credit Score Whether or not you re aware of it, your credit score (or lack thereof) plays a significant role in your financial well being. Build a great score and you ll enjoy the rewards

CREDIT BASICS About your credit score Your credit score influences the credit that s available to you and the terms (interest rate, etc.) that lenders offer you. It s a vital part of your credit health.

### Loan Lessons. The Low-Down on Loans, Interest and Keeping Your Head Above Water. Course Objectives Learn About:

Loan Lessons Course Objectives Learn About: Different Types of Loans How to Qualify for a Loan Different Types of Interest The Low-Down on Loans, Interest and Keeping Your Head Above Water usbank.com/financialeducation

### How do I get good credit?

Slide 1 Credit The information provided in this e-course is intended for educational purposes only and does not constitute specific advice for you as an individual. When evaluating your particular needs,

About credit reports Credit Reporting Agencies Credit reporting agencies maintain files on millions of borrowers. Lenders making credit decisions buy credit reports on their prospects, applicants and customers

### Understanding Credit Scoring

The Ultimate Guide to Understanding Credit Scoring www. Table of Contents The Basics Of Credit Scoring...3 5 Factors That Make Up A Credit Score...4 Rate Shopping...6 Late Payments...7 Common Credit Myths...8

Hands on Banking Using Credit to Your Advantage Credit Reports, Credit Scores and Dealing with Debt The Hands on Banking program is a free public service provided by Wells Fargo. You may also access the

### How to Avoid The Five Biggest First-time Homebuyer Mistakes. Mistake #1

How to Avoid The Five Biggest First-time Homebuyer Mistakes Mistake #1 Failure To Examine And Repair Any Credit Problems Prior To Applying For Your Loan Many potential new home buyers have no idea what

Using Credit to Your Advantage. Topic Overview. The Using Credit To Your Advantage topic will provide participants with all the basic information they need to understand credit what it is and how to make

### GREENPATH FINANCIAL WELLNESS SERIES

GREENPATH FINANCIAL WELLNESS SERIES UNDERSTANDING YOUR CREDIT REPORT & SCORE Through financial knowledge and expertise, we provide high-quality products and services that enable people to enjoy a better

IMPROVE YOUR CREDIT SCORE Effective Credit Management At Your Fingertips Introduction In this ebook, you will get valuable information including: What is a credit score The score breakdown Managing your

### Money Math for Teens. Dividend-Paying Stocks

Money Math for Teens Dividend-Paying Stocks This Money Math for Teens lesson is part of a series created by Generation Money, a multimedia financial literacy initiative of the FINRA Investor Education

### FICO Credit Score Algorithm. Group 14

FICO Credit Score Algorithm Group 14 What is FICO? Fico is short for Fair Isaac and Co. It is the most widely used credit score. The Fair Isaac Company developed custom software back in the 1980s that

Understanding your Credit Score Understanding Your Credit Score Fair, Isaac and Co. is the San Rafael, California Company founded in 1956 by Bill Fair and Earl Isaac. They pioneered the field of credit

### Solving the Credit Puzzle. L G & W Federal Credit Union

Solving the Credit Puzzle L G & W Federal Credit Union Knowledge Check How much do you already know about credit scoring? Sample Credit Report Credit Bureaus Equifax TransUnion Experian Who Can Pull Your

### Dimes to Riches Money Management for Teens in Grades 7-12

Dimes to Riches Money Management for Teens in Grades 7-12 s e e r t n o row g t n s e o yd e n o M t a! h k t n a w b o n a k t u n By now yo Your parents are & Life is getting busy and you need cash for

### redit score 600 APR ebt mortgage rate YOUR CREDIT SCORES payment history Credit scores are vital to your financial health nstallment loan

nstallment loan 20 40 680 ebt 00 redit score 600 665 payment history APR mortgage rate YOUR CREDIT SCORES Credit scores are vital to your financial health A credit score is a number that helps lenders

### FICO Score Factors Guide

Key score factors explain the top factors that affected your FICO Score. The order in which your FICO Score factors are listed is important. The first indicates the area that most affected your FICO Score

### \$uccessful Start and the Office of Student Services Present: THE WINNING SCORE

\$uccessful Start and the Office of Student Services Present: THE WINNING SCORE QUESTIONS TO BE ANSWERED How is a credit score calculated? Why is a credit score important? How can I improve my credit score?

### Understanding Your Credit Score and Credit Report. George Williams, CPA, JD, LLM Ross, Rosenthal & Company, LLP June 21, 2012

Understanding Your Credit Score and Credit Report George Williams, CPA, JD, LLM Ross, Rosenthal & Company, LLP June 21, 2012 What is a Credit Score? What is a Credit Report? A credit score is a number

Understanding Your FICO Score Contents Your FICO Score A Vital Part of Your Credit Health 1 How FICO Scores Help You 2 Your Credit Report The Basis of Your FICO Score 3 How FICO Scores Work 5 What a FICO

### How to improve your FICO Score in perilous times By Blair Ball. National Distribution of FICO Scores

How to improve your FICO Score in perilous times By Blair Ball When you re applying for credit whether it s a credit card, a car loan, a personal loan or a mortgage lenders want to know your credit risk

### Insurance Score Models

Insurance Score Models Prepared by State of Alaska Division of Insurance Department of Community and Economic Development www.dced.state.ak.us/insurance (907) 465-2020 Insurance Score Models Some insurers

### Money Math for Teens. Debt Elimination: Power Tools for Building Wealth

Money Math for Teens Debt Elimination: Power Tools for Building Wealth This Money Math for Teens lesson is part of a series created by Generation Money, a multimedia financial literacy initiative of the

### CREDIT REPORTS & SCORES:

CREDIT REPORTS & SCORES: A Guide to Understanding and Improving Your Credit NYLAG Financial Counseling Division Workshop Financial Counseling Division New York Legal Assistance Group (212) 613-5000 NYLAG

### Assume the Role of Managing Your Credit Prudently and Watch Your Credit Score Improve July 2012

Assume the Role of Managing Your Credit Prudently and Watch Your Credit Score Improve July 2012 OVERVIEW The three numbers that make up a credit score have become an obsession to some people. But what

### Understanding. What you need to know about the most widely used credit scores

Understanding What you need to know about the most widely used credit scores 300 850 2 The score lenders use. FICO Scores are the most widely used credit scores according to a recent CEB TowerGroup analyst

### Keeping Score: Why Credit Matters LESSON 1

Keeping Score: Why Credit Matters LESSON 1 Keeping Score: Why Credit Matters LESSON 1: TEACHERS GUIDE In the middle of a football grandfinal, keeping score is the norm. But when it comes to life, many

### Hofstra North Shore-LIJ School of Medicine. Office of Financial Aid

Hofstra North Shore-LIJ School of Medicine Office of Financial Aid Consumer Credit and Your Credit Report Joseph M. Nicolini, MHA Director of Financial Aid What We Will Cover Consumer credit and credit

### Financial Empowerment Curriculum Moving Ahead Through Financial Management. Workshop Credit Overview

Financial Empowerment Curriculum Moving Ahead Through Financial Management Workshop Credit Overview 1 Workshop Objectives Explain why credit is important. Access and read a copy of your credit report.

### The Basics of Building Credit

The Basics of Building Credit This program was developed to help middle school students learn the basics of building credit. At the end of this lesson, you should know about all of the Key Topics below:»

### So, What s the Score?

So, What s the Score? LandlordZONE May 2005 It s important for landlords, and for tenants too, to know the score in other words, to know about Credit Scores and to know how to check your own credit files.

### Reason Statement Full Description Actions You Can Take or Keep this in mind

Factors Guide - Experian The consumer-friendly reason descriptions and actions a consumer can take (or things to keep ) below are provided for use within your FICO Open Access customer displays. The table

### Standard 7: The student will identify the procedures and analyze the 3 responsibilities of borrowing money.

TEACHER GUIDE 7.3 BORROWING MONEY PAGE 1 Standard 7: The student will identify the procedures and analyze the 3 responsibilities of borrowing money. Your Credit Score Priority Academic Student Skills Personal

### FWA HSBC Financial Backpack Program

FWA HSBC Financial Backpack Program Understanding Credit All materials are on FWA.ORG Follow us on FACEBOOK Top Lessons Credit has many advantages and disadvantages Understand costs of credit: principal,

### Credit Workshop. What I need to know about credit and lending products of financial institutions. Financial Education Supported by:

Credit Workshop What I need to know about credit and lending products of financial institutions. Financial Education Supported by: Concept Checklist What will I learn today? [ ] What is Credit? [ ] Advantages/

### IMPROVING YOUR CREDIT AND DEBT

IMPROVING YOUR CREDIT AND DEBT The Credit & Debt Problem Americans are loaded with credit-card debt. The average American household with at least one credit card has nearly \$15,950 in credit-card debt

### Credit History CREDIT REPORTS CREDIT SCORES BUILDING A STRONG CREDIT REPORT

CREDIT What You Should Know About... Credit History CREDIT REPORTS CREDIT SCORES BUILDING A STRONG CREDIT REPORT YourMoneyCounts Understanding what your credit history is what s in it, what s not in it

### The Road to Good. How to Start Building Your credit with In-House Auto Financing

The Road to Good Credit: How to Start Building Your credit with In-House Auto Financing I. Introduction II. What is a credit score? III. How credit scores are calculated Payment history Amount of debt

### YOUR CREDIT SCORE. Payment History - 35%

YOUR REDIT SORE Many of our clients are concerned about their ability to obtain credit in the future. There are several issues related to those concerns. redit reporting agencies (Experian, Equifax, and

### Understanding Credit BY Sallie Mae and FICO

Understanding Credit BY Sallie Mae and FICO Lisa Mitchell, Sallie Mae Brad Riebel, Sallie Mae April 2015 Session Focus Overview FICO and Sallie Mae partnership on ways to help students understand why credit

### Using Credit to Your Advantage Credit Cards and Loans Participant Guide

Hands on Banking Using Credit to Your Advantage The Hands on Banking program is a free public service provided by Wells Fargo. You may also access the program anytime at www.handsonbanking.org & www.elfuturoentusmanos.org

### The Truth About Credit Repair

The Truth About Credit Repair Discover The Insider Secrets Of How The Credit System Really Works and How To Beat The Credit Bureaus At Their Own Game. David Shapiro Esq. Applied Credit Repair Solutions

### 1 Identify your goal. What is it that you want to buy. 2 Gather information. What are the terms of the credit

Be a Savvy Credit User About 40% of credit card holders carry individual balances of less than \$1,000, while about 15% individually carry total card balances of more than \$10,000. Forty-eight percent of

### Credit Scoring and Wealth

the Problem In most games, it is wise to understand the rules before you begin to play. What if you weren t aware that you were playing a game? What if you had not choice whether to play or not? Everyone

### Understanding Your Credit Score and How You Can Improve It

Understanding Your Credit Score and How You Can Improve It How is your score calculated? The exact formula is a mystery and protected by the Federal Trade Commission Think of it as a secret recipe. Credit

### Keeping Score: Why Credit Matters

Keeping Score: Why Credit Matters LESSON 6: TEACHERS GUIDE In the middle of a championship football game, keeping score is the norm. But when it comes to life, many young adults don t realize how important

This page intentionally left blank. CreditSmart Module 6: Understanding Credit Scoring Table of Contents Welcome to Freddie Mac s CreditSmart Initiative... 4 Program Structure... 4 Using the Instructor

### Taking Charge of Your Financial Future

Taking Charge of Your Financial Future Why is Your Credit Score Important? Understanding credit scoring can help you manage your credit. By knowing how credit risk is evaluated, you can take actions that

### FICO Score Factors Guide - TransUnion

Factors Guide - TransUnion The consumer-friendly reason descriptions and things to keep in mind below are provided for use within FICO Open Access customer displays. The table includes a reason description

### Standard 7: The student will identify the procedures and analyze the responsibilities of borrowing money.

TEACHER GUIDE 7.2 BORROWING MONEY PAGE 1 Standard 7: The student will identify the procedures and analyze the responsibilities of borrowing money. It Is In Your Interest Priority Academic Student Skills

### CREDIT SCORES: AN OFTEN-OVERLOOKED, BUT ESSENTIAL, ELEMENT IN FINANCIAL PLANNING Learn Why They re Important and How You Can Improve Yours

CREDIT SCORES: AN OFTEN-OVERLOOKED, BUT ESSENTIAL, ELEMENT IN FINANCIAL PLANNING Learn Why They re Important and How You Can Improve Yours ENGLEWOOD, COLORADO Have you applied for a mortgage, car loan,

Teacher Homebuyer Guide to: Improving Your Credit By John Godbey, Founder and Broker of Teacher Homebuyer Real Estate Introduction Thank you for signing up for our Ebook "Improving Your Credit." We find

### ratecredit score credit scoremortgage rate payment historydebtinstallment loanapr installment loanaprpayment historydebt Your Credit Scores

700 ratecredit score mortgage payment historydebtinstallment loanapr credit scoremortgage rate installment loanaprpayment historydebt ratecredit score mortgage 720 665 600 680 740 620 720 665 Your Credit

### Take control of your credit score

Take control of your credit score A guide to understanding and improving your credit. What is a credit score? Your credit score is a number between 300 and 850, assigned to you by a credit bureau, that

### Week 2: Personal Guarantor

Week 2: Personal Guarantor Before you begin the credit building process, you need to identify who will personally guarantee the business credit lines. Your choices are as follows: yourself, someone you

### Fun, engaging and effective. Aligned with national financial education and core curriculum requirements.

Building Your Financial Foundation Adult Level Curriculum - Instructors Guide Fun, engaging and effective. Aligned with national financial education and core curriculum requirements. Lessons on: Credit

### Money Math for Teens. Opportunity Costs

Money Math for Teens This Money Math for Teens lesson is part of a series created by Generation Money, a multimedia financial literacy initiative of the FINRA Investor Education Foundation, Channel One

### CREDIT IN A NEW COUNTRY:

CREDIT IN A NEW COUNTRY: A GUIDE TO CREDIT IN CANADA A free publication provided by Consolidated Credit Counseling Services of Canada, Inc., a registered charitable credit counselling and debt management

### Credit Counts... Know the Score!

Credit Counts... Know the Score! Understanding the Importance of Credit Scoring 2004 by Access Group, Inc. All rights reserved. Do you know the score? QUESTION What can a lender learn from your credit

### The Importance of Good Credit

The Importance of Good Credit 1 Introduction The importance of good credit What is credit? The importance of credit history when applying for a loan How to build and maintain good credit Credit and its

### Good Credit Why is Having Good Credit Important?

Good Credit Why is Having Good Credit Important? Many people in the United States have fi nancial problems. They have poor credit, are in debt, have little savings or have a combination of all three. One

### How to Improve and Maintain your Credit Score

How to Improve and Maintain your Credit Score Special points of interest: Factors that influence your credit score How your credit score is calculated Improving your credit score How to fix flawed credit

### SPECIAL REPORT: 4 BIG REASONS YOU CAN T AFFORD TO IGNORE BUSINESS CREDIT!

SPECIAL REPORT: 4 BIG REASONS YOU CAN T AFFORD TO IGNORE BUSINESS CREDIT! 4 BIG REASONS YOU CAN T AFFORD TO IGNORE BUSINESS CREDIT! Provided compliments of: FIRSTUSA DATA SERVICES, LLC 877-857-5045 SUPPORT@FIRSTUSADATA.COM

### Credit Cards. and Your Credit Score

Credit Cards and Your Credit Score Introduction Credit Cards and Your Credit Score Learning Objectives Lesson 1 Selecting a Credit Card: The Devil s in the Detail Identify and explain the costs and terms

### Get out of debt faster

Get out of debt faster Unleash the money-saving power of balance transfer credit cards. The Beginner s Guide to Balance Transfers Table of Contents creditcard.com.au Introduction 1 Balance Transfer Basics

### Understanding Credit. The Three C s of Credit. What is a Credit Bureau?

Understanding Credit By definition, the word credit has to do with trust. This is why credit impacts so many financial issues in our lives including the extension of a loan or credit card, how high an

### Credit Score and Report Overview

Credit Score and Report Overview Have you ever wondered how your credit score is calculated? Have you ever asked, but are always given vague answers? I will tell you exactly how credit scores are determined

### debt Managing debt Easy to get into, harder to get out Inside... Think before you borrow Know your options Make a debt repayment plan

debt Managing debt Easy to get into, harder to get out Inside... Think before you borrow Know your options Make a debt repayment plan Think before you borrow Borrowing money is called getting into debt.

### A Credit Smart Start. Michael Trecek Sr. Risk Analyst Commerce Bank Retail Lending

A Credit Smart Start Michael Trecek Sr. Risk Analyst Commerce Bank Retail Lending Agenda Credit Score vs. Credit Report Credit Score Components How Credit Scoring Helps You 10 Things that Hurt Your Credit

### Understanding Credit Reports

Understanding Credit Reports What is a Credit Report and Score? Your success in managing credit is reflected in your credit report and score. A credit report is a history of everything you are doing with

### The West Virginia State Treasurer s Office. A free publication provided by

YOUR CREDIT SCORE A free publication provided by The West Virginia State Treasurer s Office Visit www.wvtreasury.com or Call 1.800.422.7498 From the Office of West Virginia State Treasurer, John D. Perdue

### Loan Processing Credit Reports

Loan Processing Credit Reports Alternative Financing and Telework Loan Programs Annual Meeting Washington, DC December 13, 2004 By Brett Christensen Executive Vice President Lending Solutions Consulting,

### Mortgage Secrets. What the banks don t want you to know.

Mortgage Secrets What the banks don t want you to know. Copyright Notice: Copyright 2006 - All Rights Reserved Contents may not be shared or transmitted in any form, so don t even think about it. Trust

### Financial Empowerment Curriculum. Moving Ahead Through Financial Management. Module Three: Mastering Credit Basics

Financial Empowerment Curriculum Moving Ahead Through Financial Management Mastering Credit Basics Reviewing, Understanding and Improving Your Credit Module 3: Mastering Credit Basics Time Clock: 11:00-12:00

### When & Where CREDIT. to Apply for. How to Know. Discover when your credit is good enough to get approved FIX YOUR CREDIT YOURSELF HOW TO

HOW TO FIX YOUR CREDIT YOURSELF (without an attorney) How to Know When & Where to Apply for CREDIT Discover when your credit is good enough to get approved Introduction Now that you ve been through the

### PNC Financial Education FINANCIAL OPS. Banking Solutions for Military Personnel. Credit: Self study Guide

PNC Financial Education FINANCIAL OPS Banking Solutions for Military Personnel Credit: Self study Guide Revision Date: 11/2012 PNC Financial Education:FINANCIAL OPS Understanding Credit We all have financial

### Managing Your Credit Report and Scores. Apprisen. 800.355.2227 www.apprisen.com

Managing Your Credit Report and Scores Apprisen 800.355.2227 www.apprisen.com Managing Your Credit Report and Scores Your credit score is one of the most important aspects of your personal finances. From

Credit Reports published by AAA Fair Credit Foundation Credit Reports 1. What is a Credit Report?..........................................................2 2. What Your Credit Report Reveals About You...................................4

### Credit Cards: Rules of Thumb

Name: Date: Credit Cards: Rules of Thumb Rule 1: Never carry a credit card balance. When you use your credit card to purchase items, you will receive a statement at the end of each month that will need

### Managing debt. It s easy to get into, harder to get out. Inside... debt. Think before you borrow. Know your options. Make a debt repayment plan

debt Managing debt It s easy to get into, harder to get out. Inside... Think before you borrow Know your options Make a debt repayment plan brought to you by the retirement commission Think before you

### Personal Loans 101: UNDERSTANDING APR

Personal Loans 101: UNDERSTANDING APR In today s world, almost everyone needs access to credit. Whether it is to make a small purchase, pay for an unexpected emergency, repair the car or obtain a mortgage

### Volume 1 Taking the first steps

Volume 1 Taking the first steps Welcome to Your Money A guide to managing Take the first step in changing your financial future. Call InCharge Debt Solutions today at 1.877.544.7766 or visit www.incharge.org