Building Credit. Inside this issue:

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1 CCCS of Rochester/RethinkingDebt Headquarters: 1000 University Ave, Rochester, NY **Fall 2018** Inside this issue: Building Credit Building Credit 1 Retail Credit Cards 2 By: CCCS of Rochester Student Loan Funding 2 Ultra FICO 3 CCCS Hours 3 Ask CCCS 4 Upcoming Workshops 4 Debt Settlement 5 A great place to start is to first review your credit report. One way to do this is to pull a copy of all three of your credit reports on This site is free of charge, and you can access a free copy of your credit reports from Experian, TransUnion, and Equifax once a year. It s a good idea to review for any inaccuracies, and to see if there is anything reported that you may be unsure of. To get a free look at your credit report more often, consider pulling only one report at a time. Each report generally has the same information and if you look at a different one every 4 months, you can see a credit report three times a year. One good way to build credit is to obtain credit. A secured credit card is a great tool for people with a limited credit history. Many credit unions offer these cards to applicants with no credit or bad credit. A secured card is backed by a deposit from the applicant, which the credit limit is usually the same amount of the deposit. The minimum deposit varies by bank but is generally at least $300. These cards work similarly to a debit card, but the information is reported each month to the credit bureaus. The best way to utilize these cards is to use them for smaller monthly expenses and pay them off each month when the statement comes. It is important to make your payments on time each month, as payment history accounts for 35% of your credit score. Credit utilization is also a major portion of your credit score. Keeping your balances at 30% or less than your total credit limit helps your score. And avoid applying for unnecessary credit cards since this results in a hard inquiry on your credit and can bring your score down two or more points each time. It takes time to build or rebuild credit, but it can be done.

2 Should You Apply for a Retail Store Credit Card? By: Kristina Perez, Disbursement Specialist For starters, a retail store credit card is a physical charge card that gives you credit for a specific retailer. The amount of credit given can vary depending on your current credit score. More credit is usually given to those with higher credit scores and less credit is typically given to applicants with lower credit scores. Not everyone is approved, but if you are there are pros and cons to keep in mind. Having a retail store credit card can be great financial tool. It can help build credit if you are at least making the minimum payment on time each month. Payment history is key in building and maintaining good credit. When you don t have the funds available right away, using your retail card allows you to get the items you want sooner. For example, you might find a nice sweater that s only on sale this week, but you get paid the week after, so you use your credit card to make sure you take advantage of the sale. It gives a sense of instant gratification. You may even earn rewards or points that could turn into discounts or coupons for future purchases. At the same time, it is a great way to track your spending at that store. Keep in mind if you re not careful, pros can turn into cons. There may be a sale on that nice sweater and you want one in every color. Your retail credit card can help you get all those sweaters at once. Some people reach the maximum credit allowance and bask in the instant gratification, but then the account will start to accrue interest if the balance isn t paid in full by the due date. It s been found that retail store credit cards typically have higher interest rates than bank credit cards. If you ve maxed out the card and now owe the interest, those sweaters begin to cost more than you thought. It s important to keep a low balance on the credit card. It is recommended that you shouldn t use more than 30% of your credit limit. If you maintain a high balance and only pay the minimum amount due, your credit may not improve for a while. Be mindful that a retail credit card is supposed to be a tool to improve your score, not lower it. Student Loan Funding Extended By: Robert Jacob, Client Support Supervisor Our student loan counseling funding has been extended! Consumer Credit Counseling Service of Rochester is excited to announce that our student loan funding has been extended! From now until March 31, 2019, a grant allows us to help student loan borrowers and their families understand and take control of their federal student loan payment options for FREE. There have been a few updates to our process: Appointments must take place no later than March 31, 2019 Client must agree to follow up 3 months after the initial counseling session. This grant ONLY covers federal student loan debt. There will be a charge if client needs assistance only with private student loans. Upload of client info from the National Student Loans Data Systems must occur prior to appointment. To get more information or to schedule an appointment, please give us a call at or visit our website at today! Page 2

3 Ultra FICO Score By: Karyn Rando, Director of Counseling Operations Consumers with low credit scores may soon have a way to boost that three-digit number! A new product is supposed to become available in Summer 2019 and it will be geared towards consumers with low credit scores. Currently, potential lenders use your credit report, which includes your credit score and credit history, to see if you have paid your mortgage, personal loans, credit cards, and other debts on time. Your credit score is then calculated off of all your debts and it s broken down in five different categories which include: Payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%) - the different types of credit that you have. Lenders use this information to determine your credit risk and the interest rate that you would be charged, should they approve your loan or credit card. Here s the change with regards to the new scoring method, UltraFICO. UltraFICO will have a different focus on your credit and will allow you to show lenders your financial behavior for areas that are not included on a traditional credit report. Once consumers opt in to the alternative scoring method, their banking behavior will be used to calculate their UltraFICO score. These areas include: Length of time of their bank account being open Evidence of savings (an average of $400 min. balance) The frequency of activity On-time and regular payments The voluntary scoring method is intended to boost the number of approvals for credit card, personal loans and other debt by considering the consumers cash transactions (their banking behavior), which may indicate how likely they are to repay the debt. Before enrolling, consumers need to remember that they would be sharing their sensitive checking and savings account information and data. For more information and to keep up to date on when the new scoring method will be rolled out to the public, visit CCCS Of Rochester Business Hours CCCS of Rochester has recently changed some of its hours of operation. Customer Service Hours- Monday-Thursday- 9am-8pm Friday 9am-5pm Counseling Hours- Monday-Thursday 8am-8pm Friday 9am-5pm Some Saturdays- 9am-1pm Please call if you want to schedule an appointment or to get more information. Page 3

4 A popular question we re asked from clients involves questioning the accuracy of the information on their credit report. The potential negative impacts those errors can have on your credit report can be disastrous for your ability to get loans, new lines of credits, or better lending terms and interest rates. Staying on top of the content of your credit reports is very important. We will discuss some of the most common mistakes found in credit reports and how to fix them. Common mistakes that cause credit report errors include: Errors in entering your name or address information from an application. Loan or credit card payments may have been inadvertently applied to the wrong account. Lenders seeing double because accounts have been reported more than once, making it appear you have more open lines of credit or higher debt than you have. Ask CCCS By: Elaine Rodriguez, Client Support Representative If you closed a credit account, make sure that your report does reflect that it was "closed by grantor. Make sure that your former spouse's debts are not reflected on your report. To ensure mistakes are corrected as quickly as possible, contact both the credit bureau and organization that provided the information to the bureau. Both these parties are responsible for correcting inaccurate or incomplete information in your report under the Fair Credit Reporting Act. Credit bureaus must investigate the item in question-usually within 30 days. Make sure to include copies of documents that support your position. In addition, provide your complete name and address. Your communication also should: Clearly identify each disputed item in your report. State the facts and explain why you dispute the information. Request deletion or correction. If mailing a letter, send it by certified mail, return receipt requested, so you can document that the credit bureau did, in fact, receive your correspondence. Expect this process to take between 30 and 90 days. If you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a credit bureau while that dispute is being investigated. Finally, if the investigation does not produce the results you feel are correct, and inaccurate information in your credit report is causing you harm, you may consider hiring a lawyer to help resolve your dispute as a last resort. Upcoming Workshops January 8 6-7pm Budgeting/ Credit Report free January 26 9a-3p First Homebuyer Education- $40 February 9 9a-3p First Homebuyer Education- $40 March 3 9a-3p First Homebuyer Education- $40 March :30p Exploring Homeownership free Registration is required for all workshops. Visit our website at or call to register. Page 4

5 What is Debt Settlement? To put it very simply, debt settlement companies get your creditors to agree to forgive some of your debt. However, their services can be expensive and there may be significant unforeseen consequences. Until recently, debt settlement companies were not regulated by the Federal Trade Commission. Some of their practices may be fraudulent and illegal. Look out for substantial fees, possible lawsuits & damage to your credit score. Debt settlement companies typically charge a large up-front fee and monthly fees for their services. If you can't pay the up-front fee in full, they will set-up an installment plan. They might tell you to stop making debt payments and stop communicating with your creditors. However, their negotiations with your creditors may not begin until the up-front fee is paid in full. In the meantime, your creditors may sue you to collect the debt. If they win, they have the right to garnish your wages or put a lien on your home. These actions negatively impact your credit score. Be aware - forgiven debts are taxable income The difference between the amount you originally borrowed, and the settlement amount is added to your income for taxation by the Internal Revenue Service. You should consider this tax liability when you are weighing the costs and benefits of a debt settlement contract. Do it yourself Debt forgiveness is not a new concept. There's no need to hire a company to handle the transaction. With a little negotiation skill, you can settle your debts by yourself. Simply contact your creditor and make a proposal. Some debt settlement companies provide legitimate services, but you should be very careful in choosing a debt settlement company. Consumer Credit Counseling Service of Rochester provides debt management services. Debt management is very different from debt settlement. See the chart below for comparisons. Debt Settlement vs CCCS Debt Management DEBT SETTLEMENT Little or no regulation Debtor pays < 100% of their debt Large fee paid up front Recommend clients withhold payments from creditors Client's credit score adversely affected Income tax obligation for amount forgiven in settlement Little client support No Guarantees of success For Profit companies CCCS of ROCHESTER Licensed by the NYS Dept. of Financial Services, EOUST and HUD Debtor Pays 100% of amount owed Small fee paid monthly Monthly payments to creditors start immediately No direct effect on credit score - timely payments improve score over time No income tax obligation Strong client support 49 years of successful debt management counseling Not for profit agency Page 5

6 Non-Profit Org US Postage PAID Rochester, NY Permit NO. 986 Stay Connected with CCCS/RethinkingDebt Headquarters: 1000 University Ave., Suite 900 Rochester, NY Phone: (585) Fax: (585) Toll Free- (888) Facebook LinkedIn Twitter Toll Free Phone: This newsletter is a publication of CCCS of Rochester/ RethinkingDebt, a Not-for-Profit agency. It is a source of information for clients, sponsors, representatives of the credit industry, and the service networks supportive of our mission and vision.