Kyle's Bullets

[Audio] Kyle's Bullets. Kyle’s Bullets. By Kyle Blanchard.

[Audio] Credit Score Components 35% Account History: payment history, delinquencies, liens 30% Amounts Owed: ratio of total credit extended to amount of credit owed 15% Length of Credit History: length of credit history & average age of accounts 10% New Credit: recent credit inquiries & new account activity 10% Types of Credit Used: variety of accounts; credit cards, loans, mortgage.

[Audio] Credit Utilization Ratio Balance Owed/Credit Limit = CUR Percentage A higher credit utilization ratio will have a negative impact on an individual's credit score A lower credit utilization ration will have a positive impact on an individual's credit score A credit utilization ratio of less than 30% is better, and the closer to zero the utilization ratio progresses, the better the impact on the score.

[Audio] FICO Credit Score Range 300-580 = Poor 580-620 = Fair 620-680 = Good 680-760 = Very Good 760 - 850 = Excellent.

[Audio] Ways to Improve Credit Score Pay bills on time Pay more than the minimum payment each month Pay past due amounts in full Do not "max out" on any credit cards (30% or better credit utilization ratio) Correct inaccurate information on credit report Apply for and open new credit accounts only as needed Do not close out old accounts that contribute to a long credit history.

[Audio] Fair Credit Reporting Act (FCRA) Consumers have the right to: Know what is in their credit file Dispute incomplete or inaccurate information. Must be removed or corrected within 30 days of dispute. Require derogatory credit to be automatically removed from their credit profile Limit access to their credit file to only those with prior authorization Limit "prescreened" offers Seek damages from violators.

[Audio] Fair and Accurate Credit Transactions Act (FACTA) Combats identity theft and fraud Free credit reports annually Fraud alerts when appropriate Full credit card numbers are not allowed on receipts/purchases..

[Audio] Fair Credit Billing Act (FCBA) Applies only to credit cards and other revolving accounts Requires regular billing statements be mailed at least 14 days before one's payment is due Establishes procedures for resolving unauthorized charges on one's credit cards Can dispute billing errors within 60 days of error. The institution has 30 days to acknowledger and 90 days to make a determination..

[Audio] What To Do If a Victim of Identity Theft Make a police report (FTC Identity Theft Affidavit) Notify credit reporting agencies with fraud alert Consider closing accounts and make sure new account numbers are safe Get a free credit report Keep all records.

[Audio] If someone maxes out their credit card, what section of the credit report would contribute to the calculation of a credit score issue involving this situation?.

[Audio] What credit law allows for a free credit report annually? Fair and Accurate Credit Transactions Act (FACTA).

[Audio] Common Services Fees Regular monthly service fee (account maintenance) Wire transfer fee Printed check fee (per box) Money order and cashier checks (flat or %).

[Audio] Common Negligence Fees NSF or Non-Sufficient Funds triggered by lack of funds Overdraft Protection Transfer Fee charged when a transfer is made Overdraft Charge for advancing loaning funds Stop Payment issued ATM Transactions Limit/Check Writing Limit Fee.

[Audio] Common Access Fees Non-Network ATM is used (some banks refund) Number of checks written has been executed Online banking; mobile banking; bill pay services are added Live customer service.

[Audio] Impacts to Credit Score (High to Low) History of delinquent payment Amount of total credit used Length of time accounts have been established Number of inquiries on record.

[Audio] Emergency Funds 3-6 months of regular expenses. Start small and contribute regularly. Used for Medical bills Home appliance repairs Temporary loss of income.

[Audio] Expected Expenses Long-term Savings funds for: Holiday gifts School supplies and field trips Summer camp Other regularly occurring life events.

[Audio] Earned Income Tax Credit (EITC) Low-to-moderate-income working households Based on recipients income, marital status, and number of children.

[Audio] Educational Tax Credit Clients in post-secondary education OR who are supporting dependents in post-secondary education.

[Audio] Child and Dependent Care Tax Credit Working or actively looking for work AND who pay a service to take care of a dependent Dependent can be either adult or child.

[Audio] Types of Retirement Savings Tax-Exempt Savings Plans 401(k) IRA 403(b).

[Audio] Save annually on income taxes owing Investment growth is tax free Don't borrow or liquidate the account Long-term growth is key.

[Audio] Predatory Lending Targets seniors and minorities Offers lower introductory rates (teaser rates), which increase over time or include balloon payments making it difficult to pay off. Limited time offers Misleading information/disclosures Hidden or deceptive.

[Audio] How to Protect Against Predatory Lending Get multiple quotes from different institutions Question any elements of the quote not understood Know the household's budgetary limits.

[Audio] Bankruptcy Basics Chapter 7: Eliminate some or all debt Chapter 13: Restructure debt Make the client aware of the bankruptcy options they can use and help them weigh pros and cons Understand the impact of bankruptcy on the foreclosure process Refer to bankruptcy counselor and/or attorney.

[Audio] Chapter 7 Liquidation Assets that are not exempt are collected and sold and the proceeds are distributed to creditors. All eligible debts are discharged. Must meet with an attorney to determine ability to repay debts (Means Test) Non-Exempt Items: "Fun" or second cars Stock investments Memorabilia Exempt Items: Primary car Furniture Clothing.

[Audio] Chapter 13 Wage Earner's Plan/Reorganization Allows individuals w/regular income to develop a plan to repay all or part of their debts over 3-5 years. Can stop foreclosures and may cure delinquent mortgage payments over time Allows for rescheduling of secured debts and extend them over the life of the repayment plan. Negotiated through and facilitated by the court - payments are made to court then to creditors.

[Audio] Impacts of Bankruptcy Reduces credit scores If you can obtain loans after bankruptcy, consumers will typically qualify for a more expensive loan option Future employers could do a background check of credit history impacting potential offer A landlord may decide that a potential tenant is too risky to rent to or may request additional information Insurance companies may charge higher premiums and banks may require additional deposits.

[Audio] Dischargeable vs. Not Dischargeable Items in Bankruptcy Dischargeable Items Utility bills Credit card debt Unsecured loans Medical bills Not Dischargeable Items: Alimony Child support Taxes Student loans.

[Audio] Alternatives to Bankruptcy: Consider making adjustments to budget Ask for a loan modification Consider debt management Negotiate with lenders.

[Audio] Type of Expenses to Use on Budget Worksheet All bills Fixed monthly expenses (cash, seasonal/annual) Utility, insurance, and other bills Bank and credit card statements Records about car registration or school supplies for estimated amount.

[Audio] Using Income on Budget Worksheet If it varies, average it out after 12 months. Do NOT include retirements, FSAs, credit scores Use paychecks, benefit letters, income, and expense sheets.

[Audio] Gross Monthly Income (GMI) Formulas Hourly rate x 40 x 52 / 12 Weekly x 52 / 12 Bi-weekly x 26 / 12 Semi-monthly x 24 / 12 Annual Income / 12 Quarterly Income x 4 /12.

[Audio] Self-employed 2 consecutive years of AGI (tax returns, profit and loss, etc) Add up 2 years and divide by 24 months.

[Audio] Front-End Ratio (Rent) Monthly Housing Expenses/Gross Monthly Income (GMI) FER of 30% for renters is considered affordable. If greater, they can relocate to more affordable housing. Rent + renter's insurance (if applicable).

[Audio] Back-End Ratio (Rent) or Debt-to-Income The amount of one's income allocated to ALL debts/Gross Monthly Income (GMI) Housing expense + long-term debts (show up on credit report) + alimony paid/child support paid Rent (36%) - if exceeds 36%, loan can be denied..

[Audio] Housing Affordability - Conventional FER: 28% BER: 36% - 45%. Clients that meet certain criteria - up to 50%.

[Audio] Housing Affordability - FHA EEM FER: 33% BER: 45% Housing Affordability - FHA Front-End Ratio: 31% Principal Interest Taxes and Ins + Association Due (PITIA) Back-End Ratio: 43% Housing expense + long-term debts (show up on credit report) + alimony paid/child support paid Housing Affordability: VA FER: 41% BER: 41% Housing Affordability: USDA FER: 29% BER: 41%.

[Audio] 4 C's of Credit - Character Credit history, credit score, job history, housing stability Determines likeliness to pay back debts Can be reviewed on credit report (# of active accounts, payment history).

[Audio] 4 C's of Credit - Capacity Ability to repay, ratios, and being financially fit Front end ratio/back end ratio Consistency of employment & income Type of frequency of income (Self employed or wage earner) Can be reviewed on credit report (account balances, min. payments owing on other debts).

[Audio] 4 C's of Credit - Capital Money saved, assets for down-payment, closing cost Funds available for satisfaction of security deposit and 1st/last month's rent (rent) Funds available for satisfaction of down payment, closing costs (3-4% of loan amount), reserves (own).

[Audio] 4 C's of Credit - Collateral The property itself, appraised value of property Condition from health and safety standpoint Homeownership only.

[Audio] Affordability "Rule of Three" Income 1/3 of prices in the desired neighborhood = Rule of Three Income $50,000 x 3 = $150,000 rough price target $150,000 price / 3 = $50,000 rough income needed.

[Audio] Loan-to-Value (LTV) A percentage calculated by dividing the amount of the outstanding loan amount by the sales price or appraised value of the home; also called an LTV ratio. Most lenders will not approve if LTV exceeds 80%..

[Audio] Down Payments Monies towards purchase price Conventional: 5-20% FHA: 3.5% VA: None or low USDA: None Sources: Savings Gifts Special DPA Programs.

[Audio] Types of Down Payment Assistance Programs Local or State Department of Community Affairs/Public Housing Agency City Housing Division Community Action Agency Non Profit (Habitat for Humanity).

[Audio] HUD Programs HOME Investment Partnership Program Community Development Block Grant Program.

[Audio] DPA Benefits Offered by non-profits or government entities to help low-income families cover the costs of mortgage down payments Can pay closing costs Owner occupied, first time homebuyer Based on income, family size, and property purchased Income less than 120% of AMI Credit score must be above 620 Homebuyer education course required (8 hours) Must be preapproved by a lender Principal is forgivable over 5 years (20% per year).

[Audio] Conventional Mortgage Loans Not guaranteed or insured by any government agency, included the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) and the Department of Veterans Affairs (VA). Fixed rates 30 (most common), 15, or 10-year term (less common w/adj. rates or int. only terms) Must have good credit Have funds for closing cost and down payments (20% or PMI if LTV > 80%) Meet lender specific qualification Fannie Mae/Freddie Mae.

[Audio] Subprime Mortgage Loans Offered to people who do not qualify for a conventional loan, either because of low income, a high LTV ratio, or poor credit history. The subprime borrowers are charged a higher interest rate to compensate for the higher risks. Expensive monthly payments.