Adulting 101 Credit Karma
Hello and welcome to Adulting 101 on Credit Karma Using Credit Karma to manage your credit score information. The goal of this session is to help participants understand how to access and use Credit Karma. Session Objectives. How to access Credit Karma, the benefits of checking your credit score and what to do with your credit score information. What is Credit Karma? Credit Karma is an online tool available to the public for free for the purpose of checking your credit score. It allows users to access their credit reports from TransUnion and Equifax. It analyzes your data and makes financial recommendations just for you. It also offers information on credit cards and loans as well as identity monitoring. Here’s a screenshot of the Credit Karma website. This screenshot shows you how to access the login and set up your own account on Credit Karma, which again is free. All you’ll need is an email address and some information about your identity. What’s a credit score? Credit score is a three-digit number that relates to how likely you are to repay debt. It can be used to decide whether you’ll be approved for a credit card or a loan. Credit scores are typically based on things like how often you make payments on time and how many accounts you have in good standing? Your score will never factor in personal information like race, gender, religion, marital status or national origin. Different lenders have their own standards for credit rating scores, but typically 700 and higher is a good score. Why should I check my credit score? First off, it’s a free process. It’s also an important part of managing your finances. You can correct any wrong information on the report. It also allows you to monitor progress in building or rebuilding your credit. It can indicate if your identity has been stolen or misused as well. Everyone needs to check their credit score. How often should I check my credit score? At least once every 12 months. Regularly checking your credit score does not affect it. You can get a free credit report once a year from each of the three major entities. That means you can check your score three times during the year for free. Here’s contact information for the three major credit bureaus: Equifax, Experian and TransUnion and Credit Karma will help you to access the reports from Equifax and TransUnion on their site. This chart details credit scores. Again, something in the 700s is considered good. As you can see, an 800+ means you’re an exceptional borrower and if your score is 579 or less, you’re considered a risky borrower. What if I need to improve my credit score? Make sure your credit reports are accurate. You can do this by going on Credit Karma and setting up an account and getting a couple of those free reports to see what your information says. You can watch your credit card balances and make regular on-time payments. You can pay off any debt you have instead of transferring it to new accounts. You should pay your bills on time and avoid all late charges. And also, limit your credit card applications. In general, it’s good to only open a new credit card if you’re trying to establish credit. And what if you need to establish credit? Opening a credit card is one way and there are some cards that are more helpful in establishing credit than others. A secured credit card will require a cash deposit that serves as collateral if you miss a payment. If you can, find a card that doesn’t charge an annual fee and make sure the card company reports to all three major credit bureaus that we discussed earlier. Student credit cards gives students and young cardholders a chance to build credit, and they may even come with commercial offers or rewards. A drawback is that they typically have lower credit limits and high interest rates, so be sure to check that information when applying. Store credit cards can be helpful because they help you to save money at your favorite stores and they’ll also give people with little or no credit a chance to prove they can handle money responsibly. Just again beware of high interest rates that may come with these cards. More tips if you need to establish credit include having an authorized user or cosigner. This involves having a responsible adult with good credit themselves to support your credit or loan applications. This person should have a really trusting relationship with you because if something would happen and you don’t make payments or you default, they’re going to be responsible as your cosigner. You also can make on-time payments for any debt you currently have such as a mortgage, a student loan or an automobile loan. Tips for building credit responsibly. Don’t pay interest. You don’t need to carry a balance to build credit. So try to pay off your entire balance each month to avoid interest charges. Never miss a payment. Late payments can stay on your credit report for years and wreck your credit. Do your best to make each payment on time, even if you can only afford the minimum and don’t spend too much. Try not to use more than 30% of your available credit. That means if you have a thousand dollar credit limit try not to spend more than $300. Thank you for attending this session. Adulting 101 on Credit Karma. Here’s the Credit Karma website again if you need it as a further resource. Thank you.