Credit Scores Credit Cards and Consumer Debt How
Credit Scores, Credit Cards, and Consumer Debt • How can your credit score affect your life? • What is your credit score based on? • How to get your credit reports and credit scores • Tips for maintaining or improving your credit score Unit 1: Personal Finance Economics – Mr. Khalil
How can a Bad Credit Reputation Hurt Your Life? l l l ___________ Getting a job ___________ Interest rates and total costs on loans ___________ Ability to get insurance Problems stay with you ______! Cost of a $200, 000 Mortgage Loan Good credit score Poor Credit Score Annual Mortgage Interest Rate 6. 5% 9. 5% Monthly Mortgage Payment $1, 265 $1, 680 Total interest paid over the life of a mortgage $255, 500 $405, 000 Source: Manisha Thakor and Sharon Kedar, On My Own Two Feet: A Modern Girl’s Guide to Personal Finance (Avon, MA: Adams Media, 2007), p. 26. Based on a thirty-year fixed mortgage rate.
What is your credit report based on? l l l Do you _______ on time? _______ of your credit history Your debt-to-credit limit ratio Number of ___________ you’ve recently applied for Kind of ______ you’ve used in the past
How to get your credit reports and credit scores l 3 credit bureaus, 3 scores l l Free ___________ once per year l l l Equifax Experian Trans. Union www. annualcreditreport. com l (Beware of imposter websites with similar URLs trying to get your personal information!) 877 -322 -8228 Purchase credit scores from individual bureaus l $6 -10
Tips for maintaining or improving your credit score 1. 2. 3. 4. 5. ______________ 1. Mobile phone account, cable bill, or utility bill in your name 2. Part-time job and/or consistently use the same address 3. Become a co-applicant on your parent or guardian's checking account or credit card. 4. Get your own credit card, but use it wisely. ____________________________________ l Is the personal information yours? l Are any of the accounts not yours? l Is outdated information included? Keep the amount you owe on your credit cards as low as possible. __________________________
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