building a better financial future creditsmart training...
TRANSCRIPT
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Building a Better Financial Future
CreditSmart® Training for New Instructors
SESSION #2 – Building, Maintaining and Restoring Your Credit
June 14, 2016
Freddie Mac®
Get to Know Your ProducerAsha WatsonCommunity Outreach Professional, Freddie Mac
• Watson started her Freddie Mac Career as the Multifamily Administrative Coordinator in Freddie Mac’s Chicago office in 2006, then relocated to headquarters in Virginia in 2011 to work for Community Outreach within the Freddie Mac Foundation. She recently celebrated 10 years of service and is currently a part of the Human Resources, Talent Management & Organizational Effectiveness Division where she helps to implement the Freddie Mac Community Crew’ corporate volunteer program (#FreddieMacCrew).
• Her primary responsibilities include; organizing corporate donation drives; managing the volunteer experience in the five regional offices; planning community outreach strategy for nine Employee Resource Groups; supporting the semi-annual SERVE: Call-to-Action campaigns and our CreditSmart® Volunteer Program (CSVP); as well as managing the J.C. Nalle Community School (SE Washington, DC) business/school partnership.
• Asha is also the President / Executive Director of a nonprofit organization that empowers young women in Manassas, VA. An entrepreneur, writer, public speaker & poet. She earned the Freddie Mac Employee Excellence certificate in 2013, the Community Engagement Professional Certification from NeighborWorks America Institute in 2014
Freddie Mac® 2
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Get to Know Your PresenterCora R. Fulmore• Manager/Owner of the Mortgage & Credit Center
and The Counselor’s Corner, Inc.
• More than 35 years of experience in mortgage &
credit counseling
• Organizer of the first Florida Housing Counselors
Network
• National Consultant for NeighborWorks since 1994;
provide training in the area of:
• Certification for ED’s and Program Managers
• Housing Counseling Certification
• Foreclosure Prevention
• Credit Counseling
• Certified CreditSmart® trainer since 2001Freddie Mac® 3
Call In Information
CreditSmart® New Instructor Training
Toll Number: 1 (914) 614-3221
Access Code: 159-590-717
Webinar ID: 127-803-707
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GoToWebinar Platform
To avoid feedback noise:
If you are using a
landline or cell phone,
please make sure that
your phone is on mute.
If you are using the
speakers on your
computer, click that
option here.Freddie Mac® 5
520-771-779
How to Participate
• Use the question box to ask
questions
• Always, select “ALL
PARTICIPANTS”
Freddie Mac® 6
520-771-779
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How to Participate
• Handouts
Freddie Mac® 7
4-Part Series + Bonus Class
• SESSION #1 – CS Introduction and Money Management Basics
Tue, June 7, 2016 2:00 PM - 3:30 PM EDT
• SESSION #2 – Building, Maintaining and Restoring Your Credit
Tue, June 14, 2016 2:00 PM - 3:30 PM EDT
• SESSION #3 – Thinking like a lender and Avoiding credit traps
Tue, June 21, 2016 2:00 PM - 3:30 PM EDT
• SESSION #4 – Preparing for Homeownership and Avoiding Foreclosure
Tue, June 28, 2016 2:00 PM - 3:30 PM EDT
• BONUS CLASS - Super Charging your Credit Counseling Program
Tue, July 5, 2016 2:00 PM – 3:30 PM EDT
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CERTIFICATE ISSUED ONCE YOU HAVE TAKEN AND PASSED
10 QUESTION EXAM AFTER THE FINAL SESSION
*YOU MUST ATTEND ALL 4 SESSION*Freddie Mac®
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Homework Assignment Review
1. Go to to
check out CreditSmart Online Consumer Program, share with your
colleagues
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http://www.freddiemac.com/creditsmart/consumer_training.html
Freddie Mac®
Homework Assignment Review
1. Go to to
check out CreditSmart Online Consumer Program, share with your
colleagues.
2. Go to to review the Financial
Capability Study.
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http://www.freddiemac.com/creditsmart/consumer_training.html
http://www.usfinancialcapability.org
FINRA Investor Education Foundation
Council for Economic Education
http://www.usfinancialcapability.org/downloads/NFCS_2012_Report_Natl_Findings.pdf
http://www.councilforeconed.org/policy-and-advocacy/survey-of-the-states/#video
http://www.surveyofthestates.com/#state-of-financial-and-economic-programs-across-
the-nation
Freddie Mac®
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Freddie Mac® 11
http://bankingjournal.aba.com/2016/01/study-millennials-have-high-debt-burden-low-financial-capability/
Homework Assignment Review
1. Go to to
check out CreditSmart Online Consumer Program, share with your
colleagues
2. Go to to review the Financial
Capability Study.
3. What is the Personal Savings Rate for your state?
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http://www.freddiemac.com/creditsmart/consumer_training.html
http://www.usfinancialcapability.org
Freddie Mac®
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Homework Assignment Review
1. Go to to
check out CreditSmart Online Consumer Program, share with your
colleagues
2. Go to to review the Financial
Capability Study.
3. What is the Personal Savings Rate for your state?
4. Create an activity that could be used for one of the modules
presented today. The activity should engage the audience. The
activity can be as simple as a 2 minute presentation.
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http://www.freddiemac.com/creditsmart/consumer_training.html
http://www.usfinancialcapability.org
Freddie Mac®
Learning ObjectivesAs Trainers:
• Evaluate multiple teaching techniques
• How to teach the value of good credit
• What are the factors of the FICO scoring model
• How to use various teaching method to introduce content
• “Bright Ideas” and best practices
As Learners:
• Industry updates
• The basic components of a credit report
• How information is captured by the repositories
• Credit scoring models
• Identify ways to improve ones credit score
• What laws protect consumers
Freddie Mac® 14
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Learner Trainer
Two Hats
60% 40%
Freddie Mac® 15
Freddie Mac® 16
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Module 1: Your Credit & Why It Is Important
Module 2: Managing Your Money
Module 3: Goal Setting
Module 4: Banking Services, An Important Step
Module 5: Establishing & Maintaining Credit
Module 6: Understanding Credit Scoring
Module 7: Thinking Like a Lender
Module 8: Avoiding Credit Traps
Module 9: Restoring Your Credit
Module 10: Planning for Your Future
Module 11: Becoming a Homeowner
Module 12: Preserving Homeownership: Protecting Your Home
Investment
Freddie Mac® 17
Freddie Mac® 18
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Invisible Credit Files• CFPB reports 26 million consumers
have credit invisible files
• 19 million consumers have unscored
credit records
• Consumers in low-income
neighborhoods are more likely to be
credit invisible or to have an
unscored record
• Black and Hispanic consumers are
more likely to have limited credit
records
Freddie Mac® 19
t
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Freddie Mac®
There are many credit myths – so let’s take the
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Credit Quiz
Discussion Question – 1
1. Which Act gives all Americans the right to request a free copy
of his or her credit report annually?
a) Fair Credit Billing Act (FCBA)
b) Fair Credit Reporting Act (FCRA)
c) Fair and Accurate Credit Transactions Act (FACT Act)
d) Fair Debt Collection Practices Act
Freddie Mac® 22
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Discussion Question – 1
1. Which Act gives all Americans the right to request a free copy
of his or her credit report annually?
a) Fair Credit Billing Act (FCBA)
b) Fair Credit Reporting Act (FCRA)
c) Fair and Accurate Credit Transactions Act (FACT Act)
d) Fair Debt Collection Practices Act
Freddie Mac® 23
Why?
• The Fair and Accurate Credit Transaction (FACT) Act of 2003
gives all Americans the right to request a free copy of his or her
credit report annually from each of the three main credit-reporting
bureaus via Web, phone, fax or mail. Those bureaus are
TransUnion, Experian, and Equifax.
• Because creditors may report information to only one of the three
main bureaus, each report may include different information. Be
sure to check all three reports for outdated data or inaccuracies.
Freddie Mac® 24
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Discussion Question – 2
2. My credit score takes a hit every time it’s checked?
a. True
b. False
Freddie Mac® 25
Discussion Question – 2
2. My credit score takes a hit every time it’s checked?
a. True
b. False
Freddie Mac® 26
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Why?
• Credit Report pulls are classified as either “hard” or “soft.”
• Hard pulls have a negative impact on the score. These are pulls
generated through an inquiry for a retail credit card or a lender
application for loan approval.
• Soft pulls have no impact on the credit score. Soft pulls are from
inquires that are initiated by the consumer.
• Checking your own credit score, has no impact on your credit
score.
Freddie Mac® 27
Discussion Question – 3
3. You can include a 100-word statement on your credit report.
a) True
b) False
Freddie Mac® 28
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Discussion Question – 3
3. You can include a 100-word statement on your credit report.
a) True
b) False
Freddie Mac® 29
Why?
• Consumers have the right to include a brief statement on their
credit report that will be viewable to anyone who accesses it.
They can use the statement to indicate if they have been a
victim of fraud or if they are in the process of correcting
inaccurate data on their report. The statement usually remains
on the report for two years unless the consumer request to
have it removed sooner.
Freddie Mac® 30
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So What’s
Contained In a Credit Report
Freddie Mac® 31
Not all formats are the same
But all formats
provides the same
basic information.
Freddie Mac® 32
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Check for Inaccuracies
• Credit reports are divided into 4 sections:
Identification
Credit history/trade-lines
Public records
Inquiries
• Have your client thoroughly review each section of the report for inaccuracies.
Freddie Mac® 33
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Payment/Credit History
Freddie Mac® 35
24 months.
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Type of Account
Freddie Mac® 40
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our
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Section 605(a)(4)
Freddie Mac® 46
https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-amason-02-15-00
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Obsolescence Period
Freddie Mac® 47
https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-amason-02-15-00
Calculating the 7-year period
Freddie Mac® 48
https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-amason-02-15-00
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Reason Codes
Freddie Mac® 49
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Freddie Mac® 55
Highest
Lowest
Interactive credit score map:
Median FICO Score 8 by stateAPRIL 9, 2015
In the name of Financial Literacy Month, we had a little fun with some FICO Score data! While where you live is not considered in the calculation of your FICO® Scores, it's still interesting to compare FICO Score trends across the 50 states. The median FICO® Score 8 for the entire U.S. is 713
Freddie Mac® 56
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• Credit Scores are
fluid.
• As information
changes the score
changes
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Discussion Question – 4
4. What has the highest impact on your credit score.
a. The type of credit in use
b. The number of credit cards in my file
c. My payment history
d. The number of calls I receive from a credit grantor
Freddie Mac® 59
Discussion Question – 4
4. What has the highest impact on your credit score.
a. The type of credit in use
b. The number of credit cards in my file
c. My payment history
d. The number of calls I receive from a credit grantor
Freddie Mac® 60
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Discussion Question – 4
4. What has the highest impact on your credit score.
a. The type of credit in use
b. The number of credit cards in my file
c. My payment history - represents 35% of the score
d. The number of calls I receive from a credit grantor
Freddie Mac® 61
Discussion Question – 5
5. Will paying off my credit cards and closing out the account
improve my credit score?
a. Yes
b. No
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Discussion Question – 5
5. Will paying off my credit cards and closing out the account
improve my credit score?
a. Yes
b. No
Freddie Mac® 63
Why?
• When you close a credit card with a balance, your total available
credit and credit limit are reported as $0.
If you still have a balance on that account with no credit limit, it looks
like you’ve maxed out.
A maxed out credit card, or one that appears to be maxed out, can
have a very negative impact on your credit score since your level of
credit card debt, including your credit to credit ratio, is 30% of your
credit score.
Freddie Mac® 64
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6. How often can my credit score change in a month?
a. At the end of the month on the 30th
b. On the 15th of the month
c. As often as information changes in the file
d. None of the above
Freddie Mac® 65
Discussion Question – 6
6. How often can my credit score change in a month?
a. At the end of the month on the 30th
b. On the 15th of the month
c. As often as information changes in the file
d. None of the above
Freddie Mac® 66
Discussion Question – 6
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The Credit Score Competition Act
Freddie Mac® 70
http://www.trulia.com/blog/new-credit-score-rating-system/?ecampaign=con_cnews_digest&eurl=www.trulia.com%2Fblog%2Fnew-credit-score-rating-system%2F
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Trended & Alternative Data
Freddie Mac® 71
http://blog.transunion.com/category/trendeddata/
Freddie Mac® 72
Source: myfico.comCost: $59.00 for three reports
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Module 1: Your Credit & Why It Is Important
Module 2: Managing Your Money
Module 3: Goal Setting
Module 4: Banking Services, An Important Step
Module 5: Establishing & Maintaining Credit
Module 6: Understanding Credit Scoring
Module 7: Thinking Like a Lender
Module 8: Avoiding Credit Traps
Module 9: Restoring Your Credit
Module 10: Planning for Your Future
Module 11: Becoming a Homeowner
Module 12: Preserving Homeownership:
Protecting Your Home InvestmentFreddie Mac® 84
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Freddie Mac® 87
What’s wrong with this picture?
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§ 605. Relating to information contained in consumer
reports [15 U.S.C. § 1681c]
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Public Records
• There are three types of public records that can appear in your credit report:bankruptcy Chapter 7 or
Chapter 13 civil judgments tax liens
RESOURCE: http://www.nclc.org Freddie Mac® 90
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Sample Dispute Letter
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Sample Dispute Letter, Cont’d.
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Sample Dispute Letter, Cont’d.
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Education Techniques
• Maintain an informal atmosphere
• Act as a facilitator - not the expert
• Relate the material to real life situations
• Post the AGENDA and refer to it
• Incorporate a variety of training materials and
techniques
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• Build on earlier statements
• Encourage sharing & discovery
• Give participants time to evaluate their learning
• Maintain a setting of trust
• Be yourself and have FUN
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Education Techniques
Bright Ideas
• Use “show-and-tell” items or props to make examples
more real and relatable
What “show-and-tell” props did I use?
• Provide tools to assist in applying new knowledge
What tools did I use to reinforce points made?
• Test progress and check for understanding
What did I use to test your understanding?
• Share a story of hope or inspiration
What story did I share to give hope and/or inspiration?
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Homework Assignment
• Pull a copy of your credit report for review.
• Save all pre-approved offers between now and the final
class.
• What is the median credit score in your state.
• How many Federal Consumer Protection laws are
there?
• Review CreditSmart® Modules 4,7, and 8
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Final Business
• Thank you for your contributions to today’s presentation
• Direct all questions to [email protected]
• See you on Tuesday, June 21st for Session 3
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103Freddie Mac®