sponsors - university of maryland · 2018-08-09 · objective •develop an understanding of credit...
TRANSCRIPT
Sponsors
Wednesday Webinarswww.extension.umd.edu/womeninag
8/8/18: Understanding Credit and Credit Scores
8/22/18: An Overview of the Resource Stewardship
Evaluation Tool
9/12/18: Soil Maps for Production Agriculture
9/26/18: Farm Recordkeeping
Diamond Level
Platinum Level
Gold LevelAgriculture Law Education Initiative
PNCSilver Level
• Acres - Agriculture Mediation Service
• Choptank Electric Cooperative
• Crow Insurance• Delaware Crop Insurance
Education• Delaware Council of Farm
Organizations• Delmarva Poultry Industry
• Delaware State University—Small Farms Program
• Ensave, Inc• Future Harvest CASA• LEAD Maryland• MD Ag & Resource-Based
Industry Development Corporation (MARBIDCO)
• Shore United Bank & Wye Financial
• Weller & Associates
Understanding Credit & Credit Scores
Jesse M. Ketterman, Jr., PhD AFCExtension Educator
Maria Pippidis, AFCExtension Educator
Objective
• Develop an understanding of credit and credit reports
• Learn how to obtain a copy of your credit report
• Learn how to correct mistakes on your credit report
• Steps that you can take to improve your credit score
What is Credit?
• The ability of an individual to obtain goods or services before payment, based on the trust that the payment will be made in the future. (Google)
Chat: What are the advantages of credit?
What is Credit?
• The ability of an individual to obtain goods or services before payment, based on the trust that the payment will be made in the future. (Google)
• A record (Snapshot) of how you borrowed and repaid debt. (Guide to Surviving
Debt)
What is Credit Report?
What is Credit?
• The ability of an individual to obtain goods or services before payment, based on the trust that the payment will be made in the future. (Google)
• A record (Snapshot) of how you borrowed and repaid debt. (Guide to Surviving
Debt)
• A numerical representation of your credit worthiness.
What is Credit Report?
What is Credit Score?
Types of Credit
Revolving – Variable Payments
Installment – Fixed Payments
Open – Balance Paid in FullSecured vs
Un-secured
Closed vs
Open
Credit
Good Credit•Low interest rates
•More options
•Saves you Money
Bad Credit•High interest rates
•Lack of options
•Spend more money
•Turned away from loans
How much can credit cost?
Used Car – $8,000 / 48 months
• Excellent Credit
• Interest Rate 6%
• Monthly Payment $188
• Interest Paid $1,018
• Total Paid $9,018
Used Car - $8,000 / 48 months
• Okay Credit
• Interest Rate 15%
• Monthly Payment $223
• Interest Paid $2687
• Total Paid $10,687
Consumer Debt Ratio
Consumer Debt Repayments
Take Home Pay
• Take Home Pay: $1,800
• Debt• $200 – Credit Cards
• $190 – Car Payment
• $720 – Mortgage
• $390 / $1800 = 21.6%
Percent For Current
Debt
Take on Additional
Debt?
10 or less Safe limit;
borrower feels little
debt pressure
Could be undertaken
cautiously
11 – 15% Possibly safe limit;
borrower feels
some pressure
Should not be
undertaken
16 – 20% Fully extended;
borrower hopes
that no emergency
arises
Only the fearless or
foolhardy ask for more
21 – 25% Overextended;
borrower worries
about debts
No, borrower should
see a financial
counselor
26 or
more
Disastrous;
borrower may fee
desperate
Impossible; borrower
will probably declare
bankruptcy
Ways to damage your credit
• Bankruptcy
• Missing payments
• Late payments
• Owe lots of money
• Irresponsible credit card use
Start Here
12
Credit Bureaus
•Credit bureaus collect information from public records and companies you do business.
•They use that information to create your personal credit report.
•A credit report is comprised of four sections.
Title of Slide Here
• Bodyhttps://youtu.be/MPh7xpLdyEk
Personal Information
• Name
• Address
• Social Security Number
• Date of Birth
Credit History
• Includes all of your open and closed credit accounts and how you’ve done repaying them.
Public Records – Related to Finances
• Property Liens
• Bankruptcies
Inquires (last two years)
Hard Inquires• Ones that you initiated
by filling out a credit application
Soft Inquires• Companies that want to
send out promotional information to a pre-qualified group
Credit Report Review Checklist
Errors!
•Contact the creditor.
•Contact the credit bureau.
•Unresponsive: Contact CFPB (Consumer Financial Protection Bureau)
Fraud!
• Contact the credit bureaus and request that they place a fraud alert on your account. They will need to take steps to verify the information surrounding the suspicious activity.
• File a report with the police and the Federal Trade Commission (FTC).
Types of Freezes
•Fraud Alert – Free of Charge
•Credit Freeze – Free of Charge
•Credit Lock – Not so Free
Credit Scores
• FICO (Fair Issac Corporation)
• Vantage
Title of Slide Here
• Body
FICO Pie Chart
• Payment History
• Amount Owed
• Length of History
• New Credit
• Types of Credit Used
Length on ReportItem• Inquiries
• Late Payments
• Collections
• Judgements
• Defaulted Student Loans
• Tax Liens
• Bankruptcies
• Positive Items
Length
• 2 Years
• 7 Years
• 7 Years
• 7 Years
• 7 Years
• 7 Years
• Up to 10 Years
• Forever
Who Can See It?
• Creditors
• Employers
• Government Agencies
• Insurance Companies
• Landlords
Coping with Bad Credit
•Correct Errors
•Work with the Creditor
• Student Loan Defaults
•Public Records
•Delete Old Information
• Explain Damaging Items
• Threats
•Avoid Credit Repair Agencies
7 yrs – Collections, Judgements,
Tax Liens, Criminal Records
10 yrs – Bankruptcies
Life – Convictions
Rebuilding Credit
• Stabilize
• Establish New Accounts
• Build Credit in Your Name
• Explain Damaging Items
Source: Surviving Debt – National Consumer Law Center
Improving Your Score
• Pay bills on time.
• Reduce debt.
• Keep balances low / credit limits.
• Apply for & open new lines only when you need them.
• Check your credit report for accuracy and clear errors as soon as possible.
https://powerpay.org/
Identity Protection – How often to check
•All three credit bureaus, at least annually•http://annualcreditreport.com/
•Before you shop for a mortgage or other large investment
•Review at once or stagger?
Fair Credit Report Act
•Be told if information has been used against you
•Know what is in your file
• To ask for a credit score
• To dispute incomplete or inaccurate information
•Agencies to correct inaccurate, incomplete, or unverified information
Fair Credit Report Act
•Agencies may not report outdated negative information
•Access to file is limited
•Consent for reports to employers
•May limit “prescreened offers of credit and insurance”
• Seek damage from violators
•Victims of Identity Theft and Military have additional rights.
Sponsors
Wednesday Webinarswww.extension.umd.edu/womeninag
8/8/18: Understanding Credit and Credit Scores
8/22/18: An Overview of the Resource Stewardship
Evaluation Tool
9/12/18: Soil Maps for Production Agriculture
9/26/18: Farm Recordkeeping
Diamond Level
Platinum Level
Gold LevelAgriculture Law Education Initiative
PNCSilver Level
• Acres - Agriculture Mediation Service
• Choptank Electric Cooperative
• Crow Insurance• Delaware Crop Insurance
Education• Delaware Council of Farm
Organizations• Delmarva Poultry Industry
• Delaware State University—Small Farms Program
• Ensave, Inc• Future Harvest CASA• LEAD Maryland• MD Ag & Resource-Based
Industry Development Corporation (MARBIDCO)
• Shore United Bank & Wye Financial
• Weller & Associates