Welcome to
Improve
YOUR CREDIT
a
Put bad credit Behind you
© 2011
MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Rebuilding Good Credit
MoneyWI$E
 A joint financial education project of
Consumer Action and Capital One
Services, Inc.
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
By the end of the training you
will understand:
 How poor credit can prevent you from
doing certain things.
 That it is never too late to start to
rebuild good credit.
 What information on a credit report is
seen as negative.
 Some ways to improve one’s credit.
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About the Rebuilding Good
Credit training
 There will be two sessions of two
hours each.
 Each two-hour session will
include a 15-minute break.
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In participants’ folders
 ‘Improve Your Credit’ (brochure)
 Evaluating Financial Services Ads
(classroom activity)
 Debt Payments Worksheet (take-home)
 Are You Damaging Your Credit
questionnaire (take-home)
 Compare Three Secured Credit Card Offers
(classroom activity)
 Evaluation of the MoneyWI$E Rebuilding
Good Credit Seminar
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Rebuilding Good Credit
Session One
(Two hours)
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Welcome
 Let’s introduce ourselves.
 What do you hope to get out
of this training?
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‘Improve Your Credit’
A MoneyWI$E brochure
 Look in your folder for the
brochure titled ‘Improve Your
Credit.’
 Take a couple minutes to review
the brochure
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Damaged credit
 What does bad credit mean to
you?
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How can bad credit limit your life?
 Access to credit is essential
for buying a home or financing a
car.
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Poor credit may hinder your
ability to:
 get a credit card.
 rent an apartment.
 start phone service.
 buy life insurance.
 get a job.
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How do you know if you have
bad credit?
 Many people first realize they
have credit problems when
they are turned down for a loan,
a job or a rental dwelling.
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How do companies know if you
have bad credit?
 Information about your credit is
kept by credit reporting bureaus.
 This information on file about
you is called a credit report.
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It’s your right to see a copy of
your credit report
 You can get a free copy of your credit
reports from the 3 major reporting
bureaus each year at:
www.annualcreditreport.com
 It is also free if you’ve been turned
down for credit.
 If not, there is a charge of about $10
per copy.
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What is a credit report?
 A record of your past and
present loans and credit
accounts.
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What’s in your credit report?
 Information about your past and
current…
• credit cards
• mortgages
• car loans.
− Your credit report has information about
credit accounts you’ve had in the past
seven years (or the past 10 years if you
filed for bankruptcy).
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Remember
 If you have been denied credit in
the past 60 days, you can get a
free copy of your credit report.
 You have the right to correct
errors in your credit report.
 You can’t remove accurate
information in your credit report.
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Credit reporting bureaus
 There are three major credit
reporting bureaus:
• Equifax
• Experian
• TransUnion
− The contact information for the credit
bureaus is in your ‘Improve Your Credit’
brochure.
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Take a break
Please come back in 15
minutes
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Do credit repair companies help
fix bad credit?
 Everything a credit repair company can
do legally, you can do yourself
•
Credit repair companies charge money
− sometimes lots of money
•
•
No one can legally remove accurate
negative information from a credit
report.
If you decide to work with a company,
research its offer carefully.
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Can you get a new, clean personal
identity number?
 No. Companies that promise you a new
Social Security or tax ID number are
breaking the law.
•
They tell you that you can apply for a special
business tax identification number called an
Employer Identification Number.
•
Employer Identification Numbers are similar
to Social Security Numbers, except they’re for
businesses.
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Remember
 It’s a federal crime to make
any false statements on a loan
or credit application.
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Loan consolidation
 Can you consolidate all your loans
together under a new loan?
• Debt consolidation loans could put
you deeper into debt.
 Borrowing money from relatives or
friends can be a great way to
consolidate your debts.
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A home equity loan might be a
solution
 If you are a homeowner and have equity
in your home, you can take out a home
equity loan.
•
The interest may be tax deductible.
 Approach any loan secured by your
home with caution.
•
If you fail to repay the loan, you could
lose your home.
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Let’s evaluate some ads
 Class activity
• Take out the activity sheet from your
folders.
• Read the ads carefully.
− Do you believe they offer a legitimate
service?
• Jot down your reasons to share with
the class.
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Evaluating ads for financial
services
 Legitimate lenders never ‘guarantee’
that you can get a loan or a credit
card.
 It’s against the law to ask you to pay
for a loan before you are approved.
 Any promise to create a new identity
is a scam.
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Remember
 Legitimate ads do not make
outrageous, unbelievable claims.
• The Web sites that end in “.org”
(DOT ORG) are owned by not-forprofit organizations.
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Remember
 ‘900’ numbers are a red flag for
fraud
• When you call a ‘900’ number you
will be charged a lot of money on
your phone bill.
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Collection agencies
 If you don’t pay a debt, the
company you owe money to
might hire a collection agency.
• Collection agencies get a cut of the
debts they collect.
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What should you do if a collection
agency calls?
 Respond immediately if you don’t
agree that you owe money.
 Ask the collection agency to
prove that you owe the money.
• A collection agency can’t try to
collect the debt while its validity is
being checked out.
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 The amount of the debt.
 The name of the original
creditor.
 Notification that you have 30
days to dispute the debt.
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Stop hassling me!
 Legally, you can ask a collection
agency to back off.
 Put it in writing.
• You are still responsible for paying
legitimate debts.
• You may be losing an opportunity
to explain your situation and
resolve the debt.
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Can collection agencies call your
neighbors?
 Collectors may contact any third party
(such as your neighbor, relative or coworker) only one time.
 They can only call to confirm or
correct information about where you
are.
 They can’t tell the third party that you
owe a debt.
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Let’s wrap-up the first session
 Please read the ‘Improve Your
Credit’ brochure before the next
session.
• Next time we will go over secured
credit cards, credit counseling,
bankruptcy and how you can keep
your credit in good shape.
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Here’s a helpful worksheet
 You’ll find a worksheet titled ‘Debt
Payments Classroom Activity’ in
your folders.
 It’s for you to take home and fill
out in private.
• Attached to it you’ll find a
questionnaire to help you assess
your risk of damaged credit.
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Thank you ...
for taking part in the MoneyWI$E
Rebuilding Good Credit training
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
Rebuilding Good Credit
Session Two
(two hours)
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Welcome
 It’s great to see you again.
• Have you had any thoughts about
the first session that you’d like to
share?
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Rebuilding Good Credit
It’s never too late to start getting
your credit back on track.
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How long will it take to rebuild good
credit?
 It takes time and patience to
establish good credit.
 Each person’s situation is
different and lenders have wideranging requirements.
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How much damage has been done
to your credit?
 A few late payments might be
downplayed if you pay on time for
several months.
 A default or bankruptcy may be
more difficult to put behind you
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Why should I even try?
 Access to credit is essential for:
•
•
Buying a home.
Financing a car.
 Poor credit may hinder your ability to:
•
•
•
•
•
Get a credit card.
Rent an apartment.
Start phone service.
Buy life insurance.
Get a new job.
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What are some ways to rebuild
good credit?
 Pay your existing credit accounts
on time
 Poor Apply for a credit card or
small loan from:
• Your bank.
• Your credit union.
• A local department store.
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Find a co-signer
 Ask a relative or friend with good
credit to co-sign your credit
application.
• After a year of good payments, you
should receive credit card offers on
your own.
• Make sure to close the co-signed
account to absolve the co-signer of
responsibility.
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Get a secured credit card
 Secured credit cards are backed by
money you deposit and keep in a bank
account.
 If you don’t pay off your credit card bill,
the money in your account will be used
to cover that debt.
 Even people with poor credit may be
able to get a secured Visa or
MasterCard.
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Get Secured credit cards can help
you repair your credit.
 Make sure the credit card
company will report your
payments to credit bureaus.
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How you use your secured credit
card is important.
 Show that you can handle credit
responsibly by using your card to make
a few purchases.
 Make all payments before the due date
and pay your balance in full each
month.
 After one year, apply for a regular,
unsecured card.
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Credit limits on secured cards
 The maximum amount you can
charge is usually equal to the
amount of your deposit.
• Look for a card that will pay interest
on your deposit.
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Secured card fees
 What’s reasonable?
 Secured cards always have
annual fees.
 Avoid high up-front fees.
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Comparing secured credit card
offers
 Class activity
 Here are three secured credit
card offers.
• Decide which one seems like the
best deal.
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Let’s talk about your conclusions
 Did your responses jibe with the
conclusions on the back?
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Let’s take a break
Please come back in 15 minutes.
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Credit counseling
 Credit counseling is a service
that helps people get out of debt.
 Services offered
• Budgeting & money management.
• Debt management programs
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Most credit counseling
organizations …
 Negotiate directly with creditors
on your behalf in order to lower
interest rates and waive
accumulated late fees.
 Find a credit counseling agency
near you by calling 800-388-2227.
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Bankruptcy
 Before you consider filing
bankruptcy:
• Try to work out payment programs
with your creditors or;
• Enter a debt management counseling
program.
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Two types of bankruptcy
 Chapter 7 (straight or liquidation
bankruptcy)
 Chapter 13 (wage earner or
repayment plan)
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Bankruptcy
 Remains on your credit report
for 10 years.
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Sometimes bankruptcy cannot be
avoided
 Common reasons that people
declare bankruptcy
• Large medical bills.
• Seriously over-extended credit.
• Lack of adequate insurance after a
catastrophe.
• Divorce and marital problems.
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You need an attorney to file
bankruptcy
 Hiring an attorney protects your
rights in bankruptcy court
 Make sure the attorney you
retain is an expert in bankruptcy
 Don’t just look in the Yellow
Pages to find an attorney
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Keeping your good credit
 Review your credit report at least
once a year.
 Potentially negative information
on your credit report includes:
• Late payments on credit cards and
loans.
• Unpaid debts.
• Bankruptcy.
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Credit fraud is on the rise
 Check your credit report carefully
to ensure that:
• All the debts listed belong to you.
• A criminal hasn’t set up credit
accounts under your name.
 If you find unauthorized or
fraudulent activity, notify the
credit bureaus right away.
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Good credit is about:
 Meeting your responsibilities.
 Not taking on more than you can
handle.
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How you can protect your credit
 Order copies of your credit report
once a year to check for errors.
 Pay your bills on time.
 Apply only for credit that you
really need.
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Joint account liability
 If you divorce or separate, make
sure that joint accounts are
closed.
 You are liable for paying joint
account transactions, no matter
who makes the charges.
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Questions and Answers
Let’s open the floor to questions.
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Wrap-up and evaluation
Let’s talk about how this course
compared with your expectations.
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Congratulations!
 You’ve completed the MoneyWI$E
Rebuilding Good Credit training.
 Good luck!
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Visit money-wise.org
for additional information and to access
free financial education materials
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