Download - Managing Your Credit
Managing Your Credit
Managing Your CreditEstablishing andmaintaining good
creditcan provide manybenefits to yourfinancial future.
To Do List• Set up a realistic budget and stick to it. A
budget template is available at www.navigatingyourfinancialfuture.org.
• Open up a checking account and a savings account if you have not done so already. College Students should check with their
schools to see which local banks offer sign-up incentives for students.
• Evaluate your current credit situation.
Establishing Good Credit• Know what type of accounts show on your
credit report. • Review your credit report annually.• Verify that the information on your credit
report is accurate.• Pay the minimum balance (or more) ON
TIME each month.• Avoid going over your credit limit.• Cancel credit cards you are not using or do
not anticipate using.
• Charge only what you can afford to repay.• Try to make a payment larger than the minimum
amount due in order to reduce the balance and pay off the card at a faster rate.
• Protect yourself from credit card fraud. Sign your card right away. Keep your card in a safe place. Shred credit card receipts once your monthly statement has been verified against the receipts.
• Keep your address current with the credit card company so your bill gets delivered promptly.
• Sign up for E-Statements, if available.
Your Credit Reputation• Character - summarizes a lender’s sense of how
responsibly you handle credit obligations. • Capacity - is defined as the financial ability to
assume a certain amount of debt. • Capital - consists of the financial assets at your
disposal to pay off debt if your character and capacity do not prove sufficient. This might be your car, home, stocks, bonds, mutual funds, etc.
Credit Reports and Credit Reporting
Agencies• Visit www.annualcreditreport.com to obtain a free
credit report.• You may also contact the three major national
credit reporting agencies directly: www.equifax.com or 1-800-685-1111www.experian.com or 1-888-397-3742www.transunion.com or 1-800-888-4213
• Consumers are encouraged to review all three reports, as information may vary from one report to another.
Your Credit Score
• Lenders track your credit score and use it to determine if they should: offer new credit, increase or decrease your interest rate, and/or increase or decrease your credit limit.
• A good credit score is a vital part of your financial health.
• While a credit report is free, there is a small fee involved for requesting a credit score. For details visit www.annualcreditreport.com or www.myfico.com.
Credit Scoring TableCredit Score Description
730 -850 Excellent
700 – 729 Great
670 – 699 Good
585 – 699 Average
300 – 584 Bad
The credit rating scale maximum and minimum stretches from 850-300. While the highest score may be totally unattainable, anything in its vicinity is considered to be an excellent score.
Credit Scoring TableDetermining
FactorWeight
PercentageDescription
Payment History
35% How particular you are in paying your credit card bills, loan installments and dealing with any form of debt affects your credit score.
Debt/Amount Owed
30% Next most important factor that affects your credit score is the amount of money you owe on each of your financial accounts.
Credit History Length
15% The length of time over which you have used credit lines and your banking accounts also influence the score.
New Credit Lines Used
10% The number of new credit lines used or banking accounts recently opened impacts your score.
Credit Types Used
10% The range of different credit types used will also influence the credit rating.
Credit Report Verification
• Personal • Credit Account • Public Records• Negative Information• Inquiries
Correcting Errors on Your
Credit Report • You have the right to file a “Consumer Dispute” with the applicable credit reporting agency. Credit reporting agencies are obligated to verify the accuracy of their reports when notified of such disputes.
• If you pulled your credit report through an online site, Consumer Disputes can be filed electronically.
• For more information on how to dispute credit report errors, please visit: www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm.
Protecting your Identity• Leave important documents at home!• Keep documents in a safe place.• Use a post office box if necessary to receive
important information.• Protect your Social Security Number.• Protect PINs and computer passwords.
Protecting your Identity
• Pick up new checks at the bank – not from your mailbox.
• Check your credit report annually.• Protect your driver’s license.• Report suspected fraudulent activity or stolen
cards to appropriate office.
If your Identity is Stolen, immediately
contact:Creditors & Financial Institutions
Law Enforcement
Federal Trade Commission
DMV (for driver’s license)
SSA (for Social Security Card)
If your Identity is Stolen
• Record Keeping – It is important to maintain written chronological record of dates, times, and names of telephone contacts. After a telephone contact has been made, it is crucial to follow up in writing and keep records of all written correspondence.
Tips to Remember• Maintain good credit to help you in future financial
transactions.• Know the difference between good and bad credit
in terms of credit scores and credit reporting data.• Acknowledge there are negative consequences to
defaulting on any credit account and how this will impact your overall credit rating.
• Protect all of your confidential and private information. Credit is like an individual’s reputation - it is a precious commodity!
Navigating Your Financial FutureOSFA offers a variety of toolsand resources to assist you inyour pursuit of higher education.
www.NavigatingYourFuture.org
Questions?• Contact the Florida Department of Education,
Office of Student Financial Assistance1-888-827-2004 (Grants/Scholarships)1-800-366-3475 (Loans)www.FloridaStudentFinancialAid.org