building a better financial...

Building a Better Financial FutureCreditSmart® Training for New Instructors

SESSION #2 – Building, Maintaining and Restoring Your Credit

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MARCH 15, 2017Freddie Mac®

CreditSmart®

• Freddie Mac strongly supports the benefit of credit education and building sound financial literacy skills among consumers.

• Well-informed and well-prepared homebuyers are on the best path to enjoying successful and sustainable homeownership.

• As part of this ongoing commitment, Freddie Mac developed CreditSmartEspañol, a multilingual financial education curriculum and consumer outreach initiative designed to help consumers build and maintain better credit, make sound financial decisions, and understand the steps to sustainable homeownership.

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Your Producer - Maheen Qureshi• Specializes in public-private partnerships, with 13 years of

experience in housing outreach, financial inclusion, and environmental finance. Most recently, she co-led the start-up of NatureVest, an initiative of The Nature Conservancy that is building the field of conservation impact investing in the sustainable development space.

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• Previously, Maheen worked at Freddie Mac for nine years, managing national financial education and foreclosure prevention initiatives. Maheen also developed the women’s financial education initiative under CreditSmart and is passionate about economic empowerment of women and underserved communities.

• Maheen is multi-lingual and has lived in Pakistan, Myanmar, the Philippines, Indonesia and the U.S. She served on the Board of SAALT, a national advocacy organization, for four years and participates in various mission-oriented leadership activities.

Certificate of Completion Eligibility• Register and attend all sessions under your registration link, not that

of your colleague.

• You must login via your laptop or desktop. GoToWebinar is not able to track your participation if you’re login via your cell phone.

• Must take and pass a 10 question post-webinar test with a score of 80% or higher.

• Respond to chat and poll questions, we encourage your participation.

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Your Presenter - Cora R. Fulmore• Manager/Owner of the Mortgage & Credit Center, LLC• Creator of The Counselor’s Corner, Inc. an online training center for housing

professionals, with more than 4,000 members• Co-organizer of the first Florida Housing Counselor Network, statewide• More than 35 years of experience in mortgage & credit counseling and training• National Consultant for many organizations, current faculty member of

NeighborWorks since 1994; provide training in the area of:üCertification for ED’s and Program ManagersüHousing Counseling CertificationüForeclosure PreventionüCredit Counseling

• CreditSmart® trainer since 2001

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Disclaimer: I’ve made every effort to provide updated information for this presentation. However, today presentation is not a substitute for you staying abreast of industry changes and updates.

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4-Part Series + Bonus Class

ALL CLASSES ARE ON WEDNESDAYSCERTIFICATE ISSUED ONCE YOU HAVE TAKEN AND PASSED 10 QUESTION EXAM AFTER THE FINAL SESSION

*YOU MUST ATTEND ALL 4 SESSION* BONUS CLASS IS OPTIONAL

• SESSION #1

• SESSION #2

• SESSION #3

• SESSION #4

• BONUS CLASS

CS Introduction and Money Management Basics2:00 PM - 3:30 PM EDT

Building, Maintaining and Restoring Your Credit2:00 PM - 3:30 PM EDT

Thinking like a lender and Avoiding credit traps 2:00 PM - 3:30 PM EDT

Preparing for Homeownership and Avoiding Foreclosure2:00 PM - 3:30 PM EDT

Super Charging your Credit Counseling Program2:00 PM – 3:30 PM EDT

MARCH 8, 2017

MARCH 15, 2017

MARCH 22, 2017

MARCH 29, 2017

APRIL 5, 2017

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Homework Assignment Review 1. Go to http://www.freddiemac.com/creditsmart/consumer_training.html to

check out CreditSmart Online Consumer Program, share with your colleagues

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Homework Assignment Review 1. Go to http://www.freddiemac.com/creditsmart/consumer_training.html to

check out CreditSmart Online Consumer Program, share with your colleagues

2. Go to http://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf to review the Financial Capability Study.

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§ http://www.usfinancialcapability.org/downloads/NFCS_2012_Report_Natl_Findings.pdfü FINRA Investor Education Foundation

ü Council for Economic Education

§ http://www.councilforeconed.org/policy-and-advocacy/survey-of-the-states/#video§ http://www.surveyofthestates.com/#state-of-financial-and-economic-programs-across-the-nation

Homework Assignment Review 1. Go to http://www.freddiemac.com/creditsmart/consumer_training.html to

check out CreditSmart Online Consumer Program, share with your colleagues

2. Go to http://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf to review the Financial Capability Study.

3. What agency provides Consumer Education within your state. Is financial education part of their focus?

4. Create an activity that could be used for one of the modules presented today. The activity should engage the audience. The activity can be as simple as a 2 minute presentation.

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• Review Homework• Module 5 – Establishing and Maintaining Good Credit

• Provides an overview of the credit report

• Module 6 – Understanding Credit Scoring• Describes credit scoring from a borrower's perspective and illustrates how consumer

behavior affects credit scores

• Module 9 – Restoring Your Credit• Provides tips on how to restore impaired credit

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Learning Objective After completing this series, you will:

- Have a better understand the Consumer Protection Laws- Learn the basic components of a credit report- Be introduced to pending and current laws that could

impact the credit industry- Have a better understanding of credit scoring and it’s

impact- Learn what are the factors of the FICO scoring model

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Invisible Credit Files• CFPB reports 26 million consumers

have credit invisible files• 19 million consumers have unscored

credit records• Consumers in low-income

neighborhoods are more likely to be credit invisible or to have an unscored record

• Black and Hispanic consumers are more likely to have limited credit records

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Consumer vs. Creditor Purchased Credit ScoresCFPB Orders TransUnion and Equifax to Pay for Deceiving Consumers in Marketing Credit Scores and Credit Products

January 3, 2017

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Tips for Establishing a Credit Presences• Obtain a copy of your credit report• Establish a relationship with a bank – open a checking and

savings account• Don’t apply for too much credit at once• Don’t fall for a credit repair scheme• Do research the type of card that is right for you• Consider a secured credit card

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There are many credit myths – so let’s take the

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Credit Quiz

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Discussion Question – 1 1. Which Act gives all Americans the right to request a free copy of

his or her credit report annually?a) Fair Credit Billing Act (FCBA)

b) Fair Credit Reporting Act (FCRA)

c) Fair and Accurate Credit Transactions Act (FACT Act)

d) Fair Debt Collection Practices Act (FDCPA)

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Discussion Question – 1 1. Which Act gives all Americans the right to request a free copy of

his or her credit report annually?a) Fair Credit Billing Act (FCBA)

b) Fair Credit Reporting Act (FCRA)

c) Fair and Accurate Credit Transactions Act (FACT Act)

d) Fair Debt Collection Practices Act

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Why?• The Fair and Accurate Credit Transaction (FACT) Act of 2003 gives all

Americans the right to request a free copy of his or her credit report annually from each of the three main credit-reporting bureaus via Web, phone, fax or mail. Those bureaus are TransUnion, Experian, and Equifax.

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• Because creditors may report information to only one of the three main bureaus, each report may include different information. Be sure to check all three reports for outdated data or inaccuracies.

Discussion Question – 22. My credit score takes a hit every time it’s checked?

a. True

b. False

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Discussion Question – 22. My credit score takes a hit every time it’s checked?

a. True

b. False

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Why?• Credit Report pulls are classified as either “hard” or “soft.”

• Hard pulls have a negative impact on the score. These are pulls generated through an inquiry for a retail credit card or a lender application for loan approval.

• Soft pulls have no impact on the credit score. Soft pulls are from inquires that are initiated by the consumer.

• Checking your own credit score, has no impact on your credit score.

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Discussion Question – 3 3. You can include a 100-word statement on your credit report.

a) True

b) False

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Discussion Question – 3 3. You can include a 100-word statement on your credit report.

a) True

b) False

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• Consumers have the right to include a brief statement on their credit report that will be viewable to anyone who accesses it.

They can use the statement to indicate if they have been a victim of fraud or if they are in the process of correcting inaccurate data on their report. The statement usually remains on the report for two years unless the consumer request to have it removed sooner.

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Why?Why?

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So What’s Contained In a Credit Report

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Not all formats are the same

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But all formats provides the same basic information.

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Check for Inaccuracies • Credit reports are divided into 4 sections:

ü IdentificationüCredit history/trade-linesüPublic recordsü Inquiries

• Have your client thoroughly review each section of the report for inaccuracies.

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Payment/Credit History

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Section 605(a)(4)

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https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-amason-02-15-00

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Obsolescence Period

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https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-amason-02-15-00

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Calculating the 7-year period

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https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-amason-02-15-00

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Reason Codes

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Highest

Lowest

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• Credit Scores are fluid.

• As information changes the score changes

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Where Credit Scores Overlap• If you think there’s just one credit score,

think again.

• FICO credit score is the most widely used by lenders.

• All of the various systems for the most part use a three-digit number.

• Although each is calculated differently, they have a tendency to overlap.

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Discussion Question – 44. What has the highest impact on your credit score.

a. The type of credit in use

b. The number of credit cards in my file

c. My payment history

d. The number of calls I receive from a credit grantor

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Discussion Question – 44. What has the highest impact on your credit score.

a. The type of credit in use

b. The number of credit cards in my file

c. My payment history

d. The number of calls I receive from a credit grantor

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Discussion Question – 44. What has the highest impact on your credit score.

a. The type of credit in use

b. The number of credit cards in my file

c. My payment history - represents 35% of the score

d. The number of calls I receive from a credit grantor

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Discussion Question – 55. Will paying off my credit cards and closing out the account improve

my credit score?a. Yes

b. No

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Discussion Question – 55. Will paying off my credit cards and closing out the account improve

my credit score?a. Yes

b. No

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Why?• When you close a credit card with a balance, your total available credit and

credit limit are reported as $0.

If you still have a balance on that account with no credit limit, it looks like you’ve maxed out.

A maxed out credit card, or one that appears to be maxed out, can have a very negative impact on your credit score since your level of credit card debt, including your credit to credit ratio, is 30% of your credit score.

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Discussion Question – 66. How often can my credit score change in a month?

a. At the end of the month on the 30th

b. On the 15th of the month

c. As often as information changes in the file

d. None of the above

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Discussion Question – 66. How often can my credit score change in a month?

a. At the end of the month on the 30th

b. On the 15th of the month

c. As often as information changes in the file

d. None of the above

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The Credit Score Competition Act

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http://www.trulia.com/blog/new-credit-score-rating-system/?ecampaign=con_cnews_digest&eurl=www.trulia.com%2Fblog%2Fnew-credit-score-rating-system%2F

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Trended & Alternative Data

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http://blog.transunion.com/category/trendeddata/

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Source: myfico.comCost: $59.00 for three reports

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What’s not included in the CreditScore decision.• Age

• Gender

• National Origin

• Source of Income

• Race

• Religion

• Marital Status

• Income Level

• Zip Code

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Module 1: Your Credit & Why It Is ImportantModule 2: Managing Your Money Module 3: Goal Setting Module 4: Banking Services, An Important Step Module 5: Establishing & Maintaining Credit Module 6: Understanding Credit Scoring Module 7: Thinking Like a Lender Module 8: Avoiding Credit Traps Module 9: Restoring Your Credit Module 10: Planning for Your Future Module 11: Becoming a HomeownerModule 12: Preserving Homeownership: Protecting Your Home Investment

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What’s wrong with this picture?

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§ 605. Relating to information contained in consumer reports [15 U.S.C. § 1681c]

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Public Records • There are three types of public

records that can appear in your credit report:übankruptcy Chapter 7 or Chapter 13 ü civil judgments ü tax liens

RESOURCE: http://www.nclc.org

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Sample Dispute Letter

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Sample Dispute Letter, Cont’d.

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Sample Dispute Letter, Cont’d.

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Education Techniques• Maintain an informal atmosphere

• Act as a facilitator - not the expert

• Relate the material to real life situations

• Post the AGENDA and refer to it

• Incorporate a variety of training materials and techniques

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• Build on earlier statements

• Encourage sharing & discovery

• Give participants time to evaluate their learning

• Maintain a setting of trust

• Be yourself and have FUN

Education Techniques

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Bright Ideas• Use “show-and-tell” items or props to make examples more real

and relatableWhat “show-and-tell” props did I use?

• Provide tools to assist in applying new knowledgeWhat tools did I use to reinforce points made?

• Test progress and check for understandingWhat did I use to test your understanding?

• Share a story of hope or inspirationWhat story did I share to give hope and/or inspiration?

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Homework Assignment • Pull a copy of your credit report for review.• Save all pre-approved offers between now and the final class.

• What is the median credit score in your state.• How many Federal Consumer Protection laws are there?• Review CreditSmart® Modules 4,7, and 8

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Final Business

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