What you need

to know about

your

CREDIT.

www.ftc.gov/gettingcredit
Toll-Free 1-877-FTC-HELP (1-877-382-4357)

www.ftc.govThe Federal Trade Commission (FTC) is the

nation’s consumer protection champion.The FTC works for the consumer to preventfraud, deception and unfair businesspractices in the marketplace.The FTC provides the informationconsumers need to spot and avoid fraudand deception. Consumers can contactthe FTC for free information on a widerange of issues, including:

• Advertising claims• Buying, leasing and renting cars• Credit• Debt collection• Employment and job placement• Identity Theft• Investment schemes• Online shopping• Scholarship scams• Sweepstakes• Telemarketing• Work-at-home schemes...and more
what’s credit ’s credit

B

BBeing out on your own can be fun and exciting, but it also means

taking on new financial responsibilities. The decisions you make

now about how you manage your finances and borrow money

will affect you in the future—for better or worse.

Did you know that there are companies that keep track of whether you

pay your debts and if you make payments on time? Then these companies make this information available in the form of a credit report and

score.

A bad credit history can haunt you for a long time—seven years or

more. That’s why the best thing to do is learn how to maintain good

credit before there’s a problem. While this might seem complicated at

first, it gets easier once you understand the basics of credit and how it

works.

Credit is more than just a plastic card you use to buy things—it is your

financial trustworthiness. Good credit means that your history of payments, employment and salary make you a good candidate for a loan,

and creditors—those who lend money or services—will be more willing

to work with you. Having good credit usually translates into lower payments and more ease in borrowing money. Bad credit, however, can

be a big problem. It usually results from making payments late or borrowing too much money, and it means that you might have trouble

getting a car loan, a credit card, a place to live, and, sometimes, a job.

what’s credit ’s credit

B

Being out on your own can be fun and exciting, but it also means

taking on new financial responsibilities. The decisions you make

now about how you manage your finances and borrow money

will affect you in the future—for better or worse.

Did you know that there are companies that keep track of whether you

pay your debts and if you make payments on time? Then these

companies make this information available in the form of a credit report

and score.

A bad credit history can haunt you for a long time—seven years or

more. That’s why the best thing to do is learn how to maintain good

credit before there’s a problem. While this might seem complicated at

first, it gets easier once you understand the basics of credit and how it

works.

Credit is more than just a plastic card you use to buy things—it is your

financial trustworthiness. Good credit means that your history of

payments, employment and salary make you a good candidate for a

loan, and creditors—those who lend money or services—will be more

willing to work with you. Having good credit usually translates into lower

payments and more ease in borrowing money. Bad credit, however,

can be a big problem. It usually results from making payments late or

borrowing too much money, and it means that you might have trouble

getting a car loan, a credit card, a place to live and, sometimes, a job.
Your credit Your credit
M

Most creditors use credit scoring to evaluate your credit record. This

involves using your credit application and report to get

information about you, such as your annual income, outstanding

debt, bill-paying history, and the number and types of accounts you have

and how long you have had them. Potential lenders use your credit score

to help predict whether you are a good risk to repay a loan and make

payments on time.

Many people just starting out have no credit history and may find it tough

to get a loan or credit card, but establishing a good credit history is not as

difficult as it seems.

• You might apply for a credit card issued by a local store, because

local businesses are more willing to extend credit to someone with

no credit history. Once you establish a pattern of making your

payments on time, major credit card issuers might be more willing

to extend credit to you.

• You might apply for a secured credit card. Basically, this card

requires you to put up the money first and then lets you borrow 50 to

100 percent of your account balance.

• You might ask other people who have an established credit history

to co-sign on an account. By co-signing, the person is agreeing to

pay back the loan if you don’t.

What a Difference a Word Makes

Credit card—You can use a credit card to buy things and pay for

them over time. But remember, buying with credit is a loan—you have

to pay the money back. What’s more, if the credit card company

sends you a check, it’s not a gift. It’s a loan you have to pay back. In

addition to the cost of what you bought, you will owe a percentage

of what you spent (interest) and sometimes an annual fee.

Charge card—If you use a charge card, you must pay your balance in

full when you get your regular statement.

Debit card—This card allows you to access the money in your checking

or savings account electronically to make purchases.

Pg.No.2&3
the fine print the fine print
W

When applying for credit cards, it’s important to shop around. Fees,

charges, interest rates and benefits can vary drastically among

credit card issuers. And, in some cases, credit cards might seem like

great deals until you read the fine print and disclosures. When you’re

trying to find the credit card that’s right for you, look at the:

Annual percentage rate (APR)—The APR is a measure of the cost of

credit, expressed as a yearly interest rate. Usually, the lower the APR, the

better for you. Be sure to check the fine print to see if your offer has a

time limit. Your APR could be much higher after the initial limited offer.

Grace period—This is the time between the date of the credit card

purchase and the date the company starts charging you interest.

Annual fees—Many credit card issuers charge an annual fee for giving

you credit, typically $15 to $55.

Transaction fees and other charges—Most creditors charge a fee if you

don’t make a payment on time. Other common credit card fees include

those for cash advances and going beyond the credit limit. Some credit

cards charge a flat fee every month, whether you use your card or not.

Customer service—Customer service is something most people don’t

consider, or appreciate, until there’s a problem. Look for a 24-hour tollfree telephone number.

Other options—Creditors may offer other options for a price, including

discounts, rebates and special merchandise offers. If your card is lost or

stolen, federal law protects you from owing more than $50 per card—but

only if you report that it was lost or stolen within two days of discovering

the loss or theft. Paying for additional protection may not be a good

value.

Your Personal Financial Information

Banks and other financial companies may share your personal

financial information with their subsidiaries and other companies. But

you can limit some of that sharing if you want to. “Opting out” can

help keep much of your financial information private and reduce

unsolicited offers that come in the mail. But it also means you may not

see offers that could interest you. Your financial institutions will send

you a privacy notice once a year in your statement or as a separate

mailing. Be sure to read these notices carefully. Get answers to your

questions from these companies. If you decide you want to opt out,

follow the company’s instructions—you may need to call them, return

a form, or go online. You can shop around for a financial institution

with the privacy policy you want.

Pg.No.4&5
do the math do the math
K

K Pg.No.6&7

eep in mind that credit card interest rates and minimum monthly

payments affect how long it will take to pay off your debt and

how much you’ll pay for your purchase over time.

Suppose when you’re 22, you charge $1,000 worth

of clothes and CDs on a credit card

with a 19 percent interest rate.

$$ $ You’ll have paid an extra $1,000 in

interest. And that’s if you never

$

charge anything else on that card!

If you pay $20 every month, you’ll be over 30 by the time

you pay off the debt.
keep your credit

record clean keep your credit

record clean
G

G Pg.No.8&9

ood credit is important, now and in the future. In most cases, it

takes seven years for accurate, negative information to be

deleted from a credit report. Bankruptcy information takes even longer

to be deleted—10 years.

Know What Creditors Look

for on Credit Reports

Understanding what types of information most creditors evaluate is

important. Your credit report is a key part of your credit score, but it is

not the only factor. You get points for other things like:

• Your bill-paying history

• How many accounts you have and what kind

• Late payments

• Longevity of accounts

• The unused portions of lines of credit

• Collections actions

• Outstanding debt

Credit reporting agencies don’t share files,

so you’ll need to contact each reporting

agency to make sure the information

about you is correct. The three major

credit reporting agencies are:

Equifax

1-800-685-1111

www.equifax.com

Experian

1-888-397-3742

www.experian.com

TransUnion

1-800-888-4213

www.transunion.com

In some states, you don’t have to pay to

get a copy of your credit report.

Where to

Obtain a

Copy of

Your

Credit

Report
keep credit cards under control

keep credit cards under control
W

W Pg.No.10&11

hether you shop online, by telephone or by mail, a credit card can

make buying many things much easier; but when you use a credit

card, it’s important to keep track of your spending. Incidental and

impulse purchases add up, and each one you make with a credit card is

a separate loan. When the bill comes, you have to pay what you owe.

Owing more than you can afford to repay can damage your credit rating.

Keeping good records can prevent a lot of headaches, especially if there

are inaccuracies on your monthly statement. If you notice a problem,

promptly report it to the company that issued the card. Usually the

instructions for disputing a charge are on your monthly statement. If you

order by mail, by telephone or online, keep copies and printouts with

details about the transaction.

These details should include the company’s name, address and

telephone number; the date of your order; a copy of the order form you

sent to the company or a list of the stock codes of the items ordered; the

order confirmation code; the ad or catalog from which you ordered (if

applicable); any applicable warranties; and the return and refund

policies.

Finally, if you have a credit card, take the following precautions:

• Never lend it to anyone.

• Never sign a blank charge slip. Draw lines through blank spaces on

charge slips above the total so the amount can’t be changed.

• Never put your account number on the outside of an envelope or

on a postcard.

• Always be cautious about disclosing your account number on the

telephone unless you know the person you’re dealing with

represents a reputable company.

• Always carry only the cards you anticipate using to prevent the

possible loss or theft of all your cards or identification.

• Always report lost or stolen ATM and credit cards to the card issuers

as soon as possible. Follow up with a letter that includes your

account number, when you noticed the card was missing, and

when you first reported the loss.
protect

your

identity

protect

your

identity

If your cards, bills or

identification have been

misused to open new

accounts in your name, file a

complaint with the Federal

Trade Commission. Call toll-free

1-877-ID-THEFT (1-877-438-4338);

TDD: 202-326-2502, or visit

www.consumer.gov/idtheft.

What to Do If

You re a Victim of

Identity Theft
I

I Pg.No.12&13

dentity theft involves someone else using your personal information

to create fraudulent accounts, charge items to another person’s

existing accounts, or even get a job. You can minimize the risks by

managing your personal information wisely and cautiously. Here are

some ways to protect yourself from identity theft:

• Before you reveal any personally identifying information, find out

how it will be used and whether it will be shared.

• Pay attention to your billing cycles. Follow up with creditors if your

bills don’t arrive on time.

• Guard your mail from theft. Deposit outgoing mail in post office

collection boxes or at your local post office. Promptly remove mail

from your mailbox after it has been delivered. If you’re planning to

be away from home and can’t pick up your mail, call the U.S.

Postal Service toll-free at 1-800-275-8777, or visit www.usps.gov to

request a vacation hold.

• When possible, put passwords on your credit card, bank and

phone accounts. Avoid using easily available information like your

mother’s maiden name, your birth date, the last four digits of your

Social Security number or telephone number, or a series of

consecutive numbers. It’s a good idea to keep a list of your credit

card issuers and their telephone numbers.

• Don’t give out personal information on the telephone, through the

mail or over the Internet unless you’ve initiated the contact or you

know whom you’re dealing with.

• Protect personal information in your home. For example, tear or

shred documents like charge receipts, copies of credit offers and

applications, insurance forms, physician’s statements, discarded

bank checks and statements, and expired credit cards before you

throw them away. Be cautious about leaving personal information

in plain view, especially if you have roommates, employ outside

help or are having service work done.

• Find out who has access to your personal information at work and

verify that the records are kept in a secure location.

• Never carry your Social Security card; leave it in a secure place at

home. Give out your Social Security number only when absolutely

necessary.

• Order your credit report from each of the three major credit

reporting agencies every year to make sure it is accurate and

includes only those activities you’ve authorized.

• Carry only the identification that you actually need.
Improve your Credit record

Improve your Credit record
A

A

If you’re having trouble paying your bills, contact your creditors

immediately. Tell them why it’s difficult for you, and try to work out

a modified plan that reduces your payments to a more

manageable level. Don’t wait until your accounts have been

turned over to a debt collector. Take action immediately and

keep a detailed record of your conversations and

correspondence.

When to Contact Creditors

 lot of people spend more than they can afford and pay less

toward their debts than they should. To get control over your

finances and to manage your debt, try:

Budgeting—In many cases, people design and then stick to a budget to

get their debt under control. A budget is a plan for how much money you

have and how much money you spend. Sticking to a realistic budget

allows you to pay off your debts and save for the proverbial rainy day.

Credit Counseling—Many universities, military bases, credit unions and

housing authorities operate nonprofit financial counseling programs.

Some charge a fee for their services. Creditors may be willing to accept

reduced payments if you’re working with a reputable program to create

a debt repayment plan. When you choose a credit counselor, be sure to

ask about fees you will have to pay and what kind of counseling you’ll

receive. A credit counseling organization isn’t necessarily legitimate just

because it says it’s nonprofit. You may want to check with the Better

Business Bureau for any complaints against a counselor or counseling

organization. Visit www.bbbonline.org for your local Better Business

Bureau’s telephone number.

Bankruptcy—Bankruptcy is considered the credit solution of last resort.

Unlike negative credit information that stays on a credit report for seven

years, bankruptcies stay on a credit report for 10 years. Bankruptcy can

make it difficult to rent an apartment, buy a house or a condo, get some

types of insurance, get additional credit, and, sometimes, get a job. In

some cases, bankruptcy may not be an easily available option.

Pg.No.14&15
USE CAUTION USE CAUTION
T

Turning to a business that offers help in solving debt problems may

seem like a reasonable solution when your bills become

unmanageable. Be cautious. Before you do business with any company,

check it out with your local consumer protection agency or the Better

Business Bureau in the company’s location. One rule to remember is that if

a credit repair offer seems too easy or just too good to be true, it probably

is too good to be true. And knowing your rights can help you steer clear of

rip-offs. For example, according to state and federal laws, companies that

help people improve their credit

rating cannot:

• Make false claims about their

services.

• Charge you until the services

are completed.

• Perform services until the

waiting period has passed.

After you sign the written

contract, you have three days

to change your mind and

cancel the services.

If you’ve had a problem, the Federal Trade Commission (FTC) works for the

consumer to prevent fraudulent, deceptive and unfair business practices

in the marketplace and to provide information to help consumers spot,

stop and avoid them. To file a complaint or to get free information on

consumer issues, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or visit

www.ftc.gov/ftc/consumer.htm. The FTC enters Internet, telemarketing,

identity theft and other fraud-related complaints into Consumer Sentinel, a

secure, online database available to hundreds of civil and criminal law

enforcement agencies in the United States and abroad.

It’s a good idea to contact your local consumer protection agency, state

attorney general or Better Business Bureau, too. Many attorneys general

have toll-free consumer hotlines. To find the number for your state’s

attorney general, check with your local directory assistance.

BUYER

BEWARE!

ADS PROMISING

“DEBT RELIEF”

ACTUALLY MAY

BE OFFERING

BANKRUPTCY

As you try to take control of your debt, be on the

lookout for advertisements that offer quick fixes.

While ads pitch the promise of debt relief, they rarely

mention that this relief comes in the form of

bankruptcy. Because bankruptcy stays on your

credit report for 10 years and hinders your ability to

get credit, it’s important to ask for details before

agreeing to any debt-relief services.

Pg.No.16&17

Offers that guarantee you a

credit card for a fee—before

you even apply—are against

the law. These scams often

target consumers with credit

problems. If someone calls you

making that kind of promise,

tell the caller not to call you

anymore and hang up.

Avoid Advance Fee Loan Scams
resources resources
Federal Trade Commission

Web: www.ftc.gov

Toll-Free: 1-877-FTC-HELP (1-877-382-4357)

TTY: 1-866-653-4261

The FTC works for the consumer to prevent fraudulent, deceptive and

unfair business practices in the marketplace and to provide information

to help consumers spot, stop and avoid them. To file a complaint or to get

free information on consumer issues, visit www.ftc.gov or call toll-free, 1-

877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet,

telemarketing, identity theft and other fraud-related complaints into

Consumer Sentinel, a secure, online database available to hundreds of

civil and criminal law enforcement agencies in the United States and

abroad

Identity Theft

Web: www.consumer.gov/idtheft

Toll-Free: 1-877-ID-THEFT (1-877-438-4338)

TDD: 202-326-2502

The FTC is the federal clearinghouse for complaints by victims of identity

theft. Although the FTC does not have the authority to bring criminal

cases, the FTC assists victims of identity theft by providing them with

information to help them resolve the financial and other problems that

can result from identity theft.

The JumpStart Coalition for

Personal Financial Literacy

Web: www.jumpstartcoalition.org

The Jump$tart Coalition for Personal Financial Literacy seeks to improve

the personal financial literacy of young adults by evaluating their

financial literacy; developing, disseminating and encouraging the use

of standards for grades K-12; and promoting the teaching of personal

finance.

Pg.No.18&19
Don’t be lost Don’t be lost

Lost Wallet or Purse

 File a police report.

 Cancel your cards

 immediately.

?
A

A

About Lost

or Stolen

Credit Cards...

If your card is lost or stolen, federal law

protects you from owing more than $50 per

card-but only if you report that the card

was lost or stolen within two days of

discovering the loss or theft. If you suspect

any fraudulent purchases, you may be

asked to sign a statement under oath that

you did not make the purchase(s) in

question.

lost or stolen wallet or purse is a gold mine of

information for identity thieves. If your wallet or

purse is lost or stolen:

• File a report with the police immediately and keep a copy.

• Cancel your credit cards. Call the issuer(s) immediately. Many

companies have 24-hour toll-free numbers to deal with such

emergencies. The number is on your monthly statement.

• Get new cards with new account numbers.

• Call the fraud departments of the major credit reporting

agencies, and ask each agency to put a “fraud alert” on your

account:

Equifax 1-800-525-6285

Experian 1-888-397-3742

TransUnion 1-800-680-7289

• Report the loss to the fraud department of the bank where you

have your checking and savings accounts. Ask about the next

steps regarding your accounts, including your ATM or debit

card.

• Review your credit reports regularly and have them corrected

when necessary.

• Report a missing driver’s license to your state department of

motor vehicles.

• Change your home and car locks, if your keys were taken.

Pg.No.20&21

?