Credit_2_F09 - Credit continued When am I in trouble? What...

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Credit continued • When am I in trouble? • What is the maximum I should be spending on credit payments? Credit Ratios Debt payment to disposable income Debt payments Disposable income = .16 - .20 Example Kellogg Co. $40,000 gross income Payroll taxes -$8,000 Disposable income $32,000 net income Monthly income /12 Monthly disposable income $2,666 Multiply by .16 $426. Multiply by .20 $533. Credit Bureaus Equifax Transunion Experian Credit Bureau data Fair Isaac and COmpany FICO Credit Score
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550 600 650 700 750 800 850 50% FICO Score • 35% Payment History • 30% Amounts owed • 15% Length of credit history • 10% Taking on more debt? • 10% Types of credit used Payment History 35% • Pay your bills on time. • Types of credit Credit cards Retail cards Installment loans Mortgages • Late or missed payments Amounts Owed 30% • How much is too much? • Amount owed on all accounts • Balance on accounts - # and % of credit limit -utilization ratios • Close accounts? Length of credit history 15%
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Credit_2_F09 - Credit continued When am I in trouble? What...

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