Rebuilding Good Credit - PowerPoint Training
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Transcript Rebuilding Good Credit - PowerPoint Training
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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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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