Sponsors - University Of Maryland · 2018-08-09 · Objective •Develop an understanding of credit and credit reports •Learn how to obtain a copy of your credit report •Learn

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.

Questions????

Jesse Ketterman – jketterm@umd.edu

Maria Pippidis – pippidis@udel.edu

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