UPDATED Hud Certification Exam: 1. Financial Management (A+ GUARANTEED)

Items to Include for Tracking Income - ANSWER Regular Salary Temporary Jobs Unemployment Compensation Public Assistance *If pay varies, average it over 12 months Items NOT to include for tracking income - ANSWER Pretax Payroll Deductions Credit Score Documents to Use for Budgeting: Income - ANSWER Paychecks/Payslips If self employed, Income/Expenses sheet Additional Income Checks/Cash Government Issued Benefits Letters Items to Include for Tracking Expenses - ANSWER All bills All fixed monthly expenses All cash expenses Seasonal/Aual Expenses: car registration, insurance, gifts, tax fees, vacations, holidays, etc Documents to Use: Tracking Expenses - ANSWER Utility/insurance/other bills Bank Statements Credit Card Statements Records about car registration, school supplies, etc. 5 Parts of a Credit Report - ANSWER Personal Information Account/Trade Line Information Public Records Inquiries Consumer Rights Credit Factors - ANSWER Payment History Capacity Used Length of Credit History Type of Credit Used New Credit How does Payment History affect your credit? - ANSWER Positive: Timely payment history demonstrates reliability. Negative: Late payment history demonstrates higher risk of future delinquency. Negative Examples: Lien, judgment, collection account, charge-of account, repossession, bankruptcy How does Capacity Used affect your credit? - ANSWER Positive: Low credit utilization demonstrates good financial management. Negative: High credit card balances demonstrate poor financial management (i.e., client needs more access to credit). Negative Examples: Maxed out credit cards How does Length of Credit History affect your credit? - ANSWER Positive: Longer credit history provides more information for lenders, which means lower risk. Negative: Shorter credit history provides little to no information for lenders, which means higher risk. Negative Examples: No credit history How do Types of Credit Used affect credit? - ANSWER Positive: Different types of credit show variety. Variety shows lenders that consumers can manage different types of credit. Negative: Fewer types of credit show limited profile information to lenders, which means a higher risk. Negative Examples: Only having a student loan or only having credit cards How does New Credit affect your credit? - ANSWER Positive: Credit applications can lead to new credit accounts or loans, which can establish history over time. Negative: Too many inquiries or new credit accounts in a short period of time will raise questions for lenders. Negative Examples: New inquiry each month or several new lines of credit within a few months Breakdown of Credit Score / Impact Weight - ANSWER 35% Account History 30% Amounts Owed 15% Length of Credit History 10% New Credit 10% Types of Credit Used FICO Score - ANSWER Fair Isaac Corporation Score Three Crediting Bureaus - ANSWER Experian Transunion Equifax Fair Credit Reporting Act - ANSWER Act that protects privacy of background information and ensures that information supplied is accurate. • You have the right to know what is in your file. • You have the right to dispute incomplete or inaccurate information. • Access to your file is limited. Information may only be provided for a valid need. You must give your consent to employers. You may limit "prescreened" offers you get. • You may seek damages from violators. • Additional State Rights: In some cases, you might have more rights under state law. Fair and Accurate Credit Transactions Act - ANSWER An amendment to the Fair Credit Reporting Act that allows consumers to request and obtain a free credit report once each year from each of the three primary consumer credit reporting companies (Equifax, Experian, and TransUnion). • You have the right to a free annual credit report. • You have the right to place a fraud alert on your credit file if you believe you have been a victim of fraud. • Credit card numbers must be truncated so the full number is not visible on receipts. Fair Credit Billing Act - ANSWER Provides consumers with a means to dispute a billing error on open-ended credit accounts (credit and charge cards) - dispute must be sent via mail within 60 days of the date on the CC statement. Creditor has 30 days to acknowledge and 90 days to make a determination. • You can dispute billing errors associated with your credit card account. • You must be billed in a tmely manner. Four steps of asset building - ANSWER 1. Choose the right bank or credit union account.