Credit Voyage

A self-guided, online workshop based on content developed by ideas42 with generous support from Capital One.

*This workshop is not intended to provide financial advice or guidance; instead we’re here to help provide key terms and share best practices that can help improve your relationship with money. Any opinions or advice is of the organization and not necessarily Capital One’s.

Important Housekeeping Points

• This workshop is 100% self-guided.
• Use the NEXT and PREVIOUS buttons to navigate.
• Do not use your browser’s back button. If you do, it will exit you from the program.
• This course can take between 30 and 60 minutes. Click "Save for Later" to exit and return later.
• Click the SUBMIT Button at the end of the activity to download your free Certificate of Completion

*See https://www.moneyfit.org/privacy-policy-and-disclosures for our privacy policy

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

PROGRAM DISCLOSURE FORM

Disclosure to Client for HUD Housing Counseling and Education Services

Debt Reduction Services, Inc. (dba DRS or Money Fit) offers Housing Counseling services (Counseling) and Educational courses (Education).

Counseling and Education clients will receive information on topics that prepare current and prospective homebuyers and renters and others to make better-informed housing decisions. Financial topics may also include money management, budgeting, understanding and building credit, preparing for a mortgage loan application, managing finances, and preventing and eliminating consumer debt.

DRS also offers the following services:

• A debt management program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
• Credit counseling and debtor education certificates required during the bankruptcy filing process;
• Student loan repayment plan counseling and application services.

RELATIONSHIPS WITH INDUSTRY PARTNERS

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation: The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services.

Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.

SEE ACCEPTANCE BELOW

HOUSING COUNSELING AND EDUCATION CLIENT AUTHORIZATION

This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

1. Services: DRS provides the following housing-related counseling services that include Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.
   Please refer to DebtReductionServices.org for details of our services.
2. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
3. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services, or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
4. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
5. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential information, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
6. Refusal of Services: You have the right to refuse services without any penalty or loss.
   Disclosure of Policies and Practices: You will be provided with our agency disclosure statement.
7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

Why Build Credit?

Here's the map of the credit journey you will take through this course.

Good credit is not the end goal itself. Good credit is the journey you take toward your goals.

{ Credit for Credit's Sake Is a Meaningless Pursuit }

Journeys can be tough. Things come up - unexpected expenses like changes in employment that can make the path harder.

So first, you need to choose your destination? (bottom right corner of the map above).

A credit score is a number that summarizes how likely lenders think you are to repay borrowed money.

The higher your score, the more likely you are to pay your debts as agreed.

Most credit scores range from 300-850.

A good credit score can help qualify you for...

• Credit card accounts
• Buying a car
• Buying a home
• Private student loans
• Waiving utility security deposits
• Employment in law enforcement, government, and finance
• Lower car, homeowners, or life insurance premiums
• Elective medical procedures
• ...and more.

Worried?

Perhaps you worry it might take you a year or more to achieve your goal?

Don’t worry if you’ve got a ways to go. We all have to start somewhere.

Or perhaps you're worried that your credit is so low (or even non-existent) that you'll never recover.

No matter what your score is today, you’re in the right place to improve it!

Checking Your Credit Score

You have many options for checking your credit score, including free apps and website services.

One place where you can go is Creditwise from CapitalOne.

It comes with lots of other credit monitoring tools.

• Monitor your credit score
• Check other accounts that are reporting on your credit report

You can find CreditWise and similar apps on the App Store or Google Play.

A Story about Why Credit Matters

Over the next few screens, you'll see a case study about two individuals and how differences in their credit scores can have a dramatic effect on the cost of borrowing money.

Ms. Garcia and Mr. Jones both want to buy the same year, make, and model of car from the same dealership.

A Story about Why Credit Matters

They both apply for and receive a 3-year loan for $10,000.

A Story about Why Credit Matters

Mr. Jones has to pay $79 more per month than Ms. Garcia for the same car purchased for $10,000.

A Story about Why Credit Matters

After 3 years, Mr. Jones will have paid almost $3,000 more than Ms. Garcia.

What could have happened?

While any of those reasons would be possible, for this example, we're talking about the difference that having a high score versus a low score can have on loan terms:

• Interest rates
• The time to pay off one's debt (the length of a loan)

Both impact the total cost of borrowing money.

In the most common credit scoring models (FICO and VantageScore), the higher your credit score the better your credit rating.

And, interest rates on loans are often tied to the borrower's credit score.

{ The higher your score, the lower your interest rate and the less you pay in interest over the life of your loan }

PLUS, higher credit scores can increase the chances that you’ll get access to credit!

Review the following pie chart that shows the five general factors in a FICO credit score. Look for which factors are the most influential.

35%: Payment History is whether you’ve paid consistently and on-time in the past.

30%: Credit Utilization is the percentage of your available credit (aka your limit) that you’ve spent, or borrowed.

15%: Credit History is the length of time each account’s been open and time since the account’s most recent action.

10%: New Credit tracks whether you’ve opened up new lines of credit.

10%: Credit Mix refers to your mix of different kinds of credit – like credit cards, or student loans.

Credit ratings try to predict your future behavior when it comes to making your debt payments on time. For a good credit score, you need to build a history of paying your debts as agreed.

{ Past Behavior Is the Best Predictor of Future Behavior }

It takes a minimum of 6 months to start building a credit score

It typically takes a year or more to build a strong credit score. You will need to:

• Repay credit accounts consistently and on time.
• Keep your card balances low (paying off every month to $0 is best)
• Keep your oldest account open and active.

But Taking Out Debt Isn’t Always The Best Strategy

Debt can be BAD if…

• it’s attached to an expensive, high interest rate
• it will take a long time to repay, and
• you don’t have the money to pay it down

Debt can help you STRENGTHEN your credit score if…

• you’re able to get a low interest rate
• you can pay it off quickly, and
• it helps you build a history of paying consistently and on time

Credit cards generally don't charge you interest ("grace period") if you pay off the balance in full every month.

In such cases, the interest rate does not matter as much.

When it comes to debt, the LARGER your monthly payment, the LESS INTEREST you pay OVER TIME.

Paying more than the minimum can have a huge impact on your debt

Compare 3 Repayment Scenarios

Each starts with the same credit card debt of $2,500 and an interest rate of 18%.

• Mr. Lewis pays the monthly MINIMUM.
• Ms. Davis pays the monthly minimum plus $10.
• Ms. Clark pays the monthly minimum plus $100.

Before he's paid off, Mr. Lewis will pay double what Ms. Davis pays and ten times more than Ms. Clark.

 

Mr. Lewis will also take twice as long as Ms. Davis to pay off the same original debt and ten times as long as Ms. Clark.

 

By paying more than the minimum, Ms. Clark pays off her loan in 2 years with minimal interest.

We’ll now review Four Strategies that can help you strengthen your credit.

As we review them, choose ONE strategy you’d most like to pursue - the one that feels most relevant to your life.

Credit-building Strategy #1: Start Building A Credit History

Having a credit history and score can be important to accessing financial opportunities in the future. Without either, you can be limited in your ability to achieve your financial goal.

With this strategy, you will work towards building a credit history, starting with considering a secured card.

New to Credit? You’re not alone: Over 28 Million American adults don’t have a credit history.

Information Source: (2022). 49 million Americans are living without a credit score. Oliver Wyman for Experian

Credit-building Strategy #2: Improve Payment History

A single missed payment can drop your credit score by as many as 100 points; your payment history is an important factor in calculating credit scores.

With this strategy, you’ll be working towards paying your bills consistently and on-time.

• Pursuing this strategy could have a big impact on your credit score.
• Since your payment history makes up 35% of your credit score, a single missed payment can reduce your credit score by as many as 100 points.
• With this strategy, you’ll be working towards paying your bills consistently and on-time.
• If you don’t have the money right now to pay the minimum on your card, this strategy also has tips for how to make saving easier. 

Information Source: (July 2020) Understand your credit score. CFPB.

Credit-building Strategy #3: Stay Under 30% of your Credit Limit

Keeping credit card utilization (the total amount that you charge DIVIDED BY your the sum of your credit limits) below 30% can boost your credit score significantly if you've been carry higher balances. The lower the utilization rate the better.

With this strategy, you’ll learn tactics to stay under 30 percent of your credit limit.

Information Source: (July 2020) Understand your credit score. CFPB.

 

Credit-building Strategy #4: Manage Accounts

 

Having a longer account history, a mix of accounts, and fewer inquiries can moderately affect your credit score.

With this strategy, you’ll work towards maintaining old accounts and opening new accounts or credit lines with caution.

Information Source: Credit Checks: What are credit inquiries and how do they affect your FICO® Score? myFico

Invitation for Follow Up Support

Regardless of which option you choose to focus on, and in the spirit of support, we invite that you participate in two 30-second email surveys approximately 6 months and 12 months from now.

It will just ask you to report your credit-building progress to help you stay on track.

None of your personally-identifying information will be shared with any party outside Money Fit by DRS (also dba Debt Reduction Services Inc),.
Your participation is completely voluntary.

On the next screen, you will see a list of possible first-steps you can take related to your choice, along with some tips for reducing your spending so you'll have more money in your account to put toward building your credit.

Plan for Today's First Step

Step 1

The first step in your Credit-building Strategy is to achieve ONE thing TODAY.

Here's the FIRST STEP you chose:

• {forStrategy}{pleaseChoose173}{pleaseChoose176}{pleaseChoose179}

Why not take a quick break and work briefly on this first step? It should take you 10-15 minutes at the most.

When you're done, come back and pick up where you left off.

Plan for Your Next Steps

Breaking Down Your Credit-building Goals

Step 2

Next, identify ONE thing  you can do in the near FUTURE (1-3 months) as Step 2 of Your Credit-building Strategy

Here's the NEXT STEP you chose:

• {nextPlease170}{nextPlease174}{nextPlease}{nowPlease180}

Visualization

Research shows that you will be more likely to do something in the future if you can visualize yourself doing it. So, if you're comfortable doing this, close your eyes for 30-40 seconds and visualize yourself achieving this next step.

• What is your future self wearing?
• How is your future self feeling?
• What is your future self thinking?
• Who is your future self with and where?
• What room are you in?
• Are you sitting at a table, a desk, or elsewhere?

Source: Information Source: Duckworth, A. L., Kirby, T., Gollwitzer, A., & Oettingen, G. (2013). From Fantasy to Action: Mental Contrasting with Implementation Intentions (MCII) Improves Academic Performance in Children. Social psychological and personality science.

Creating a Backup Plan

Even the best-laid plans of mice and men... will go wrong.

No matter which goal you have chosen, something is bound to happen to get in your way. What will you do when that happens? Give up or adjust? Persevere or move on to something easier?

Behavioral science tells us that if you look ahead at the possibilities of something going wrong in your plan and plan now how you'll react, you will be significantly more likely to stay on track despite setbacks along the way.

 

Now, what can you do to complete your steps even if what you wrote previously actually happens? Here's what you wrote:

{brieflyDescribe}

In the space below, write a backup plan. Then ask yourself if it feels like a realistic solution to the potential problem above.

Reminders

As you wrap up this course, first of all, congratulations on making it this far. You have the makings of a great credit-building plan and a backup plan to boot. After you click on the final "Submit" button, you will receive your responses in your email Inbox.

Let's set up the final but not least important step in your credit-building plan:

Setting Your Reminders!

Instead of relying on your best intentions, enlist the help of technology and/or old-school paper to jog your memory when it comes to what step in your credit-building plan you're going to take and when.

Set up your reminder(s) now. Don't wait till later. It's okay. This course will be here when you get back. Once they're set up, click "Next."

You Made a Lot of Progress Today!

Today, you...

• Prioritized two credit-building tasks
• Learned a few strategies for cutting costs in your life
• And made a plan for how you’re going to build your credit
• You’re walking away better equipped to build your credit rating

Next?

• Make your payments on time
• Pay down your balances
• Keep old accounts open and active
• Minimize new credit applications

Thank you all for your hard work today.

Wrapping Up

Before we say our farewells and share final thoughts, we would love to get your feedback about this course with ONE BRIEF SURVEY.

On the next page, we'll ask you to answer 5 easy questions. That's it!

Final Survey

Please indicate whether you agree or disagree (or neither) with the statements below. Your answers will not generate any additional requests or potential contact.

All questions are optional.

Done? Click the "Submit for Free Certificate"

{name}, you will be able to download your certificate of completion on the next page. You will also receive an email at {email} with a link to download your certificate.

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www.MoneyFit.org