Building a strong credit history. A public education campaign brought to you by MasterCard

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1 Building a strong credit history A public education campaign brought to you by MasterCard

2 Buying your first car, renting your first apartment, starting college, beginning your first real job master your credit early or your dream of getting ahead will be left behind. 2

3 Asking the right people the right questions can help you be more independent, not less. Don't be afraid to talk to them about money and get some good advice. 3

4 Understand what credit is, know how to make smart money decisions and get set for the good life. 4

5 Master Your Card is a public education program that helps you get the most from your money through prepaid, credit and debit cards. 5

6 MasterCard is a technology company that builds safe, smart and simple solutions for making payments and purchases. 6

7 Consumers have the money. Banks issue credit and hold funds. Businesses have goods and services. 7

8 MasterCard provides the technological magic that links them all together. 8

9 Credit basics

10 Words you should know: Credit history: a record of your debt that includes your history of credit card and loan repayment and bill payments. Three major credit bureaus (Experian, TransUnion and Equifax) track your credit history and compile it into a credit report. Credit score: credit bureaus evaluate your credit history and assign you a credit score that gets used by lenders to decide whether to give you credit and on what terms. Annual percentage rate (APR): the interest rate charged on your credit card balance every month if you don't pay it off in full. Credit line/credit limit: the amount of money that you can charge to a credit card. Minimum payment: the least amount of money you have to pay on your credit card each month. 10

11 The first step in building your credit history is applying for a credit card. A credit card is a payment card issued by a bank or other financial institution. Each time you use it, you borrow credit (money) from the bank that gave you the card. 11

12 Instead of applying for multiple cards, find banks or financial institutions that give credit cards to first-timers. You may get several offers, but sign up for just one card to begin with. Don t fall for gimmicks and skip the free T-shirt. 12

13 In order to qualify for a credit card, you must be at least 18. If you re under 21, you'll also need either a cosigner or proof of income. 13

14 It may be difficult to get a credit card because you lack a credit history or have a lower income. 14

15 It's easier to get a credit card when you have a job, establish a bank account and start building a credit history, even if it s short. 15

16 Your credit, your future

17 What s a credit rating and why do I always hear people talking about it? 17

18 A credit rating or credit score is a rating that lenders, banks, landlords and others use to evaluate your financial strength. 18

19 Credit scores change over time, ranging from about 300 to more than

20 A number of things influence your credit score. 20

21 15% Credit history length 10% Types of credit used 30% Amounts owed 10% New credit 35% Payment history A number of things influence your credit score. 21

22 EXCELLENT Higher scores will save you money. The higher the score, the lower the interest rate you will pay. GOOD Improve your score by paying your bills on time and keeping your balances low. POOR Financial institutions consider you a greater risk. You may not be approved for a loan at all. 22

23 EXCELLENT Higher score=lower rates as low as 28.9% 7.9% as high as POOR Lower score=higher rates 23

24 EXCELLENT Higher score=lower rates as low as 18.9% 5.1% as high as POOR Lower score=higher rates 24

25 EXCELLENT Higher score=lower rates as low as 9.5% 3.9% as high as POOR Lower score=higher rates 25

26 Typical $160,000 loan with a 30-year fixed mortgage Typical 5-year auto loan of $25,000 Credit card rates may vary due to different factors Credit scores offer lenders an idea of how much risk you might pose EXCELLENT % APPROXIMATE 5.1% APPROXIMATE 8.0% APPROXIMATE Higher scores will save you money. The higher the score, the lower the interest rate you will pay. GOOD % APPROXIMATE 8.8% APPROXIMATE 13.1% APPROXIMATE Improve your score by paying your bills on time and keeping your balances low. POOR % APPROXIMATE 18.4% APPROXIMATE 24.4% APPROXIMATE Financial institutions consider you a greater risk. You may not be approved for a loan at all. 26

27 Good credit opens doors

28 Follow these simple rules for a high credit score and a low-stress financial future. 28

29 Pay your bills on time. Pay off monthly balances in full. Know your credit limit and don t go over it. Do Keep your monthly balance low. Pay off debt rather than move it around. Read the fine print to know about fees and how to avoid them. Use your phone to monitor your balance. Review your credit report regularly with free annual reports, and dispute any inaccuracies right away. Report lost or stolen cards right away. Take advantage of special products and tools. Set smart spending limits you can tell the bank what your max limit should be. 29

30 Don t close unused credit cards. Don t Don t open multiple accounts in a short period of time. Don t let someone else in the family open up a card in your name. 30

31 But more than anything, borrow only what you can repay! 31

32 Thank you

33 To get the most value from electronic payments, visit