Protecting
and Building your Credit
How does good credit help you?
Lower auto and homeowner insurance rates
 Lower rates on car loans
 Your credit may even affect your ability to get
a job!

Why do companies charge more for
people with bad credit?
Insurance companies have found a correlation
between risk of accidents/claims and credit
scores
 Credit card companies and banks look at your
credit history to determine the likelihood you
will repay the loan

More risk = Higher rates
Can I get a checking account
if I have bad credit?
Better chance with a credit union
 Open a savings account first – can still get ATM
card, receive direct deposits, etc.
 May be able to open checking account at bank
used by employer
 Open an investment account; most investment
banks will open a bank account for you without a
credit check (but may cost $500 or more to
open)

Establishing and Building Credit
Apply for a credit card and make sure you pay
it off each month
 Discover.com has good cards for students
with cash back incentives
 Set up your credit card for automatic
payments so you are never late

Rebuilding Credit

Secured Credit Cards
Some people don’t quality for regular credit cards
 Secured cards require a cash collateral deposit
that determines your credit line
 Banks may reward you for good payment history
and add to your credit line without additional
deposits

Secured Credit Cards
People usually qualify for a regular unsecured
credit card after a year with the secured card
 Switch as soon as you can to an unsecured card as
fees and rates are lower
 Better than a prepaid card for rebuilding credit
because a prepaid card = debit card (they are not
reported to the major credit bureaus)

Secured Credit Cards

Watch out for fees:





Don’t pay an application fee
Don’t pay insurance policies!!
Annual fees lower at credit unions
Read the fine print!
Ask how long the issuer will keep your deposit after
card is closed
Make sure card issuer DOES report to three
major credit bureaus
 Ask the card issuer if they flag report to credit
bureaus as a secured credit card

Recommendations
Get the lowest annual fee you can
 Just charge a few things each month and pay
off entire balance each month
 Don’t go into credit card debt! It can takes
YEARS and YEARS to repay: Calculator
 Compare credit cards at BankRate.com or
look into cards through a credit union (i.e.
Global)

Check your Credit Reports
annualcreditreport.com is free
 Can check for free once a year from each
credit bureau

TransUnion
 Experian
 Equifax

ChexSystems
Credit reporting agency used by 80% of banks
 You can get one free report per year from
their Web site
 Some credit unions don’t use ChexSystems
 If you owe one bank money, you may not be
able to open account at another bank if they
run report in ChexSystems
 You can apply for account online to avoid
embarrassment

Global Credit Union
Location across from STA Plaza
 They offer secured loans for $250 or $500
with no credit check and no fee at 5% interest.
They are reported to Equifax as installment
loan.
 They offer two secured credit cards; to qualify,
you can’t owe more than $500 to another
bank. Annual fee is low ($12 or $18) and
interest rate about12% or 18%.

Global Credit Union
$20 to join (one-time fee)
 After 6 months to a year, most qualify for a
regular credit card (it depends on your credit
history)

Free Financial Help
Your Questions
How do I pick a stock?
 What are good investments?
 What’s a Roth IRA?

Choosing a Bank

What things should I look for?
Owning a Home
What is equity?
 How do I choose a bank for a home loan?

Compare, compare, compare!
 Points vs. interest rate

Debt-to-income ratio?
 Does it make sense to refinance?
 Selling a home to limit taxes Tax Info
 Best place to invest that money?

Your FICO Score
You have to pay extra for it
 Precise formula for calculating it is a mystery,
but experts estimate it is calculated this way:

35% based on your payment history
 30% based on credit utilization
 15% based on length of time you’ve had credit
 10% based on new credit
 10% based on the types of credit you currently
have

Budgeting
How do I estimate my power bill?
 Track your expenses for a few months to
develop a budget/see where your money goes
 Consider using “money buckets” or envelope
system
STCU Web Site

Strategies for Improving your Score
Limit the number of credit cards you have
 Clean up your score




If a company no longer exists or a bank has merged
with another, bureaus are required to remove
information because it is no longer verifiable
Try to keep debt utilization rate low (people with best
credit scores borrow 7% or less of limit)
All 3 credit bureaus allow you to add a brief
statement to report, which may help with employers
Stay Away from These Things!!

Credit repair offers


Some dispute all of your accounts, but after credit
bureaus validate the accounts, they appear on
your report again
Secured credit cards with monthly fees or
application fees
Miscellaneous
How do you have paid items removed from
your credit? Info
 How do you build your credit?
 How can I get the best car loan deal?
 How is interest calculated? Stay tuned!
 Teaching kids they can’t buy everything
 Choosing lowest car insurance
 Considering bankruptcy

How to Teach Teenagers (& yourself)
Good Web Sites
Moneysavingmom.com
 Clarkhoward.com
 http://balancetrack.org/

AM Radio Shows
Clark Howard
 Dave Ramsey

Ways to Save Money

Groceries
Buy generic brands
 Consider low-cost protein sources like beans
 Get the Wednesday ads and stock up on good
deals
 Use leftovers

Ways to Save Money

Clothes and furniture

Buy second hand
Craigslist
 Consignment shops


Insurance
Get several quotes
 Increase deductible


Check out books from the library

Download music for free with Freegal
If you spend 30 minutes clipping
coupons and you save $10.00 on
groceries, that’s like earning $20 an
hour tax-free!
Good Web Sites
Moneysavingmom.com
 Clarkhoward.com

AM Radio Shows
Clark Howard
 Dave Ramsey

Other questions

Why do some rich people pay lower tax rates
than middle-class taxpayers?


Capital gain taxes vs. ordinary income
Different tax structures in different states

Income taxes versus sales taxes
Income Taxes

Use W-4 form worksheet to determine
number of allowances
Interest
Cost of using money
 You pay interest when you borrow money
 You earn interest when you invest money

High interest rates are good for savers, bad for
borrowers. 
Mortgages
First and second mortgages
 Refinances

Certificates of Deposit (CDs)
Ties up your money for a period of time
 Early withdrawal penalties, but higher rates
than regular savings
 No fee to purchase
 Doesn’t help build your credit
 Invest in bonus rate savings accounts first
