ozark mtn. bank presentation

Get Smart About CreditGet Smart About Credit

Hollister High SchoolHollister High School

November 12, 2008November 12, 2008

What is Credit?What is Credit?

When a When a lenderlender issues money or issues money or

creditcredit to a to a borrowerborrower, there is an , there is an

understanding that the money will be understanding that the money will be

repaid in a specified amount of time, repaid in a specified amount of time,

often in regular installments.often in regular installments.

What is Credit?What is Credit?

The money repaid generally includes the The money repaid generally includes the

original amount of the loan – the principal original amount of the loan – the principal

– in addition to a fee charged for use of – in addition to a fee charged for use of

the money – interest. Plus there is a the money – interest. Plus there is a

processing fee. When you accept credit processing fee. When you accept credit

you enter into a contractual agreement to you enter into a contractual agreement to

repay what you borrowed.repay what you borrowed.

Credit DosCredit Dos

DO know the power of credit.DO know the power of credit.

Credit DosCredit Dos

DO know the power of credit.DO know the power of credit. DO start small.DO start small.

Credit DosCredit Dos

DO know the power of credit.DO know the power of credit. DO start small.DO start small. DO put your full legal name on all DO put your full legal name on all

applications and be consistent.applications and be consistent.

Credit DosCredit Dos

DO know the power of credit.DO know the power of credit. DO start small.DO start small. DO put your full legal name on all DO put your full legal name on all

applications and be consistent.applications and be consistent. DO read the fine print on the DO read the fine print on the

credit application.credit application.

Credit DosCredit Dos

DO understand the Annual DO understand the Annual Percentage Rate or APR.Percentage Rate or APR.

Credit DosCredit Dos

DO understand the Annual DO understand the Annual Percentage Rate or APR.Percentage Rate or APR.

DO set a budget and stick to it.DO set a budget and stick to it.

Credit DosCredit Dos

DO understand the Annual DO understand the Annual Percentage Rate or APR.Percentage Rate or APR.

DO set a budget and stick to it.DO set a budget and stick to it. DO keep your credit card in a DO keep your credit card in a

secure place.secure place.

Credit DosCredit Dos

DO understand the Annual DO understand the Annual Percentage Rate or APR.Percentage Rate or APR.

DO set a budget and stick to it.DO set a budget and stick to it. DO keep your credit card in a DO keep your credit card in a

secure place.secure place. DO order a copy of your credit DO order a copy of your credit

report annually. report annually. (www.annualcreditreport.com)(www.annualcreditreport.com)

Credit Don’tsCredit Don’ts

DON’T feel pressure to get a DON’T feel pressure to get a credit card.credit card.

Credit Don’tsCredit Don’ts

DON’T feel pressure to get a DON’T feel pressure to get a credit card.credit card.

DON’T open a lot of credit DON’T open a lot of credit accounts within a short period of accounts within a short period of time.time.

Credit Don’tsCredit Don’ts

DON’T feel pressure to get a DON’T feel pressure to get a credit card.credit card.

DON’T open a lot of credit DON’T open a lot of credit accounts within a short period of accounts within a short period of time.time.

DON’T pay your bills late.DON’T pay your bills late.

Credit Don’tsCredit Don’ts DON’T feel pressure to get a credit DON’T feel pressure to get a credit

card.card. DON’T open a lot of credit accounts DON’T open a lot of credit accounts

within a short period of time.within a short period of time. DON’T pay your bills late.DON’T pay your bills late. DON’T sign up without shopping DON’T sign up without shopping

around for interest rate & annual feearound for interest rate & annual fee

Credit Don’tsCredit Don’ts

DON’T spend more than you can DON’T spend more than you can afford.afford.

Credit Don’tsCredit Don’ts

DON’T spend more than you can DON’T spend more than you can afford.afford.

DON’T just pay the minimum DON’T just pay the minimum amount due.amount due.

Credit Don’tsCredit Don’ts

DON’T spend more than you can DON’T spend more than you can afford.afford.

DON’T just pay the minimum DON’T just pay the minimum amount due.amount due.

DON’T share your credit card DON’T share your credit card number or your PIN number.number or your PIN number.

What’s in your What’s in your Credit ScoreCredit Score

Identifying Information Identifying Information

Your name, address, Social Security Your name, address, Social Security number, date of birth and employment number, date of birth and employment information are used to identify you. information are used to identify you. These factors are not used in credit These factors are not used in credit scoring. Updates to this information scoring. Updates to this information come from information you supply to come from information you supply to lenders. lenders.

What’s in your What’s in your Credit ScoreCredit Score

Trade Lines Trade Lines

These are your credit accounts. Lenders These are your credit accounts. Lenders report on each account you have report on each account you have established with them. They report the established with them. They report the type of account (bankcard, auto loan, type of account (bankcard, auto loan, mortgage, etc), the date you opened the mortgage, etc), the date you opened the account, your credit limit or loan amount, account, your credit limit or loan amount, the account balance and your payment the account balance and your payment history. history.

What’s in your What’s in your Credit ScoreCredit Score

Credit Inquiries Credit Inquiries

When you apply for a loan, you authorize your lender When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your section contains a list of everyone who accessed your credit report within the last two years. The report you credit report within the last two years. The report you see lists both "voluntary" inquiries, spurred by your see lists both "voluntary" inquiries, spurred by your own requests for credit, and "involuntary" inquires, own requests for credit, and "involuntary" inquires, such as when lenders order your report so as to make such as when lenders order your report so as to make you a pre-approved credit offer in the mail. you a pre-approved credit offer in the mail.

What’s in your What’s in your Credit ScoreCredit Score

Public Record & Collection Items. Public Record & Collection Items.

Credit reporting agencies also collect Credit reporting agencies also collect public record information from state and public record information from state and county courts, and information on overdue county courts, and information on overdue debt from collection agencies. Public debt from collection agencies. Public record information includes bankruptcies, record information includes bankruptcies, foreclosures, suits, wage attachments, foreclosures, suits, wage attachments, liens and judgments. liens and judgments.

What’s in your What’s in your Credit ScoreCredit Score

Credit Scores range Credit Scores range

from 300 - 850from 300 - 850

700 – 850 = Excellent700 – 850 = Excellent

650 – 700 = Average650 – 700 = Average

Below 650 = Needs WorkBelow 650 = Needs Work

This range will vary from lender to lenderThis range will vary from lender to lender

Bank ProductsBank Products

Checking AccountsChecking Accounts– Debit CardsDebit Cards– Credit CardsCredit Cards

Bank ProductsBank Products

Checking AccountsChecking Accounts– Debit CardsDebit Cards– Credit CardsCredit Cards

Savings AccountsSavings Accounts

Bank ProductsBank Products

Checking AccountsChecking Accounts– Debit CardsDebit Cards– Credit CardsCredit Cards

Savings AccountsSavings Accounts Certificate of Deposits (CDs)Certificate of Deposits (CDs)

Bank ProductsBank Products

Checking AccountsChecking Accounts– Debit CardsDebit Cards– Credit CardsCredit Cards

Savings AccountsSavings Accounts Certificate of Deposits (CDs)Certificate of Deposits (CDs) Installment LoansInstallment Loans

Bank ProductsBank Products

Checking AccountsChecking Accounts– Debit CardsDebit Cards– Credit CardsCredit Cards

Savings AccountsSavings Accounts Certificate of Deposits (CDs)Certificate of Deposits (CDs) Installment LoansInstallment Loans Mortgage LoansMortgage Loans

Bank ProductsBank Products

Checking AccountsChecking Accounts– Debit CardsDebit Cards– Credit CardsCredit Cards

Savings AccountsSavings Accounts Certificate of Deposits (CDs)Certificate of Deposits (CDs) Installment LoansInstallment Loans Mortgage LoansMortgage Loans Commercial LoansCommercial Loans

Checking AccountsChecking Accounts

Many different types (free, interest, Many different types (free, interest,

etc.)etc.) Must be 18 or older (or have Must be 18 or older (or have

parent/guardian on the account)parent/guardian on the account)

Must have a photo identification, Must have a photo identification,

social social

security number and physical security number and physical addressaddress

Able to access your account onlineAble to access your account online

Checking AccountsChecking Accounts

Applications for most forms of credit Applications for most forms of credit will ask for both types of accounts. will ask for both types of accounts. Demonstrating you can save money Demonstrating you can save money and manage a checking account can and manage a checking account can improve your standing as a loan improve your standing as a loan candidate.candidate.

Debit CardsDebit Cards

Money comes directly out of your Money comes directly out of your

accountaccount

Easier than carrying cashEasier than carrying cash

NEVERNEVER share your PIN share your PIN

Keep track of your purchasesKeep track of your purchases

Credit CardsCredit Cards

Receive a bill once a monthReceive a bill once a month

Easier than carrying cashEasier than carrying cash

NEVERNEVER give your card to someone give your card to someone

elseelse

Good idea to never spend more than Good idea to never spend more than

you you can afford.can afford.

Savings AccountsSavings Accounts

Limited AccessLimited Access

Pays more interest than checkingPays more interest than checking

Rainy Day FundRainy Day Fund

Certificates of DepositsCertificates of Deposits

Often referred to as CDsOften referred to as CDs

Pays a lot more interestPays a lot more interest

Can’t access the money for a period Can’t access the money for a period

ofof time without penaltytime without penalty

Installment LoansInstallment Loans

Also called Personal LoansAlso called Personal Loans

Often used to buy a vehicleOften used to buy a vehicle

Have to give collateralHave to give collateral

Make monthly payments for up to Make monthly payments for up to

five five

years generallyyears generally

Installment LoansInstallment Loans

Borrow $10,000 for 48 mo. for ’04 Borrow $10,000 for 48 mo. for ’04

vehiclevehicle

Installment LoansInstallment Loans

Borrow $10,000 for 48 mo. for ’04 Borrow $10,000 for 48 mo. for ’04

vehiclevehicle

8.25% =$245.30/mo. = $11,775 8.25% =$245.30/mo. = $11,775

totaltotal

Installment LoansInstallment Loans

Borrow $10,000 for 48 mo. for ’04 Borrow $10,000 for 48 mo. for ’04

vehiclevehicle

8.25% =$245.30/mo. = $11,775 8.25% =$245.30/mo. = $11,775

totaltotal

9.95% = $253.39/mo = $12,163 9.95% = $253.39/mo = $12,163

totaltotal

Installment LoansInstallment Loans

Borrow $10,000 for 48 mo. for ’04 Borrow $10,000 for 48 mo. for ’04

vehiclevehicle

8.25% =$245.30/mo. = $11,775 8.25% =$245.30/mo. = $11,775

totaltotal

9.95% = $253.39/mo = $12,163 9.95% = $253.39/mo = $12,163

totaltotal

22.00% = $315.06/mo = $15,123 22.00% = $315.06/mo = $15,123

totaltotal

Installment LoansInstallment Loans

Borrow $10,000 for 48 mo. for ’04 Borrow $10,000 for 48 mo. for ’04

vehiclevehicle

8.25% =$245.30/mo. - $11,775 total8.25% =$245.30/mo. - $11,775 total

9.95% = $253.39/mo - $12,163 total9.95% = $253.39/mo - $12,163 total

22.00% = $315.06/mo - $15,123 22.00% = $315.06/mo - $15,123

totaltotal

Buy Here, Pay Here or Payday LoansBuy Here, Pay Here or Payday Loans

Mortgage LoansMortgage Loans

Also called Home LoansAlso called Home Loans

CollateralCollateral

Make monthly payments for up to 30 Make monthly payments for up to 30

years generallyyears generally

A.R.M.’s vs. Conventional LoansA.R.M.’s vs. Conventional Loans

Commercial LoansCommercial Loans

Also called Business LoansAlso called Business Loans

Often used to buy or start a Often used to buy or start a

businessbusiness

CollateralCollateral

Make monthly payments for up to 15 Make monthly payments for up to 15

years generallyyears generally

Tips to Manage Tips to Manage Debt ResponsiblyDebt Responsibly

Are you aware of all of your Are you aware of all of your monthly payments?monthly payments?

This may seem obvious but many This may seem obvious but many people have no idea what their total people have no idea what their total debt burden is each month.debt burden is each month.

Tips to Manage Debt Tips to Manage Debt ResponsiblyResponsibly

Do you pay your bills on time?Do you pay your bills on time?

In addition to protecting your credit In addition to protecting your credit history, you will avoid costly fees and history, you will avoid costly fees and late charges. For example, if you are late charges. For example, if you are often late paying your credit card bills, often late paying your credit card bills, you may see your interest rate you may see your interest rate increase.increase.

Tips to Manage Debt Tips to Manage Debt ResponsiblyResponsibly

Do you record all your debit Do you record all your debit transactions?transactions?

In addition to keeping your account in In addition to keeping your account in order, you will also avoid costly fees order, you will also avoid costly fees from being overdrawn.from being overdrawn.

Tips to Manage Debt Tips to Manage Debt ResponsiblyResponsibly

Do you protect your credit Do you protect your credit information?information?

Don’t become a victim of credit fraud! Don’t become a victim of credit fraud! Keep all of your records in a safe and Keep all of your records in a safe and secure place. Never give out personal secure place. Never give out personal financial information over the phone financial information over the phone or via an e-mail. or via an e-mail.

Tips to Manage Debt Tips to Manage Debt ResponsiblyResponsibly

Do you check your account on Do you check your account on a regular basis?a regular basis?

It used to be a standard It used to be a standard recommendation to check your bank recommendation to check your bank statement each month. Now you can statement each month. Now you can access your account via online access your account via online banking and look for transactions that banking and look for transactions that don’t make sense to you.don’t make sense to you.

Identity TheftIdentity Theft

Someone assumes your identity to Someone assumes your identity to

make make purchasespurchases

Never reply to e-mails or text Never reply to e-mails or text

messagesmessages asking you for personal information asking you for personal information (phishing)(phishing)

Careful with your personal Careful with your personal

informationinformation

True or False?True or False?

Fraud and Identity theft are so Fraud and Identity theft are so uncommon that it can’t happen to uncommon that it can’t happen to me.me.

True or False?True or False?

Fraud and Identity theft are so Fraud and Identity theft are so uncommon that it can’t happen to uncommon that it can’t happen to me.me.

As long as you have a credit card As long as you have a credit card you don’t need an emergency you don’t need an emergency savings fund.savings fund.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

1.1. Order copies of your credit report Order copies of your credit report once a year to ensure they are once a year to ensure they are accurate. accurate. www.annualcreditreport.comcreditreport.com

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

1.1. Order copies of your credit report Order copies of your credit report once a year to ensure they are once a year to ensure they are accurate. accurate. www.annualcreditreport.comcreditreport.com

2.2. Keep an eye on your accounts Keep an eye on your accounts throughout the year by reading throughout the year by reading your monthly/periodic your monthly/periodic statements thoroughly.statements thoroughly.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

3.3. Tear up or shred pre-approved Tear up or shred pre-approved credit offers, receipts and other credit offers, receipts and other personal information that link personal information that link your name to account numbers.your name to account numbers.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

3.3. Tear up or shred pre-approved Tear up or shred pre-approved credit offers, receipts and other credit offers, receipts and other personal information that link personal information that link your name to account numbers.your name to account numbers.

4.4. Know your billing cycles and take Know your billing cycles and take action if you think mail is action if you think mail is missing.missing.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

3.3. Tear up or shred pre-approved credit Tear up or shred pre-approved credit offers, receipts and other personal offers, receipts and other personal information that link your name to information that link your name to account numbers.account numbers.

4.4. Know your billing cycles and take Know your billing cycles and take action if you think mail is missing.action if you think mail is missing.

5.5. When you pay bills, don’t put them When you pay bills, don’t put them in your mailbox with the red flag up.in your mailbox with the red flag up.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

6.6. Protect your account Protect your account information.information.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

6.6. Protect your account Protect your account information.information.

7.7. Don’t carry your Social Security Don’t carry your Social Security card, passport or birth certificate card, passport or birth certificate unless you need it that day.unless you need it that day.

Guarding Your Credit Guarding Your Credit from Identity Thievesfrom Identity Thieves

6.6. Protect your account Protect your account information.information.

7.7. Don’t carry your Social Security Don’t carry your Social Security card, passport or birth certificate card, passport or birth certificate unless you need it that day.unless you need it that day.

8.8. Never provide personal or credit Never provide personal or credit card information over the phone, card information over the phone, unless you initiated the call.unless you initiated the call.

BudgetingBudgeting

What is your current income?What is your current income?

BudgetingBudgeting

What is your current income?What is your current income? What are your monthly credit What are your monthly credit

obligations?obligations?

BudgetingBudgeting

What is your current income?What is your current income? What are your monthly credit What are your monthly credit

obligations?obligations? What are your monthly rent or What are your monthly rent or

mortgage expenses?mortgage expenses?

BudgetingBudgeting

What is your current income?What is your current income? What are your monthly credit What are your monthly credit

obligations?obligations? What are your monthly rent or What are your monthly rent or

mortgage expenses?mortgage expenses? What are your monthly expenses?What are your monthly expenses?

Questions?Questions?

Thank you!Thank you!

Hollister High SchoolHollister High School

November 12, 2008November 12, 2008