Week 4 Women and Money

What is social mobility?

Improving social status over time (jobs, income, education)

What does stable housing help people do? (Four things)

Keep jobs, go to school, build connections, plan for the future

What happens without housing stability?

Education, social connections, and employment opportunities can be disrupted, undermining long-term economic progress

What does eviction make harder?

Fully participating in work, community, and civic life

What can unstable housing prevent?

People from improving their social and economic status

What does owning a house involve?

Mortgage loan, credit, tested budget, what it means to be a homeowner

What is a credit score?

Three-digit number designed to represent the likelihood you will pay your bills or debt on time

Who uses credit scores and why?

Lenders and landlords use it as an efficient tool to assess risk and trustworthiness

What are the characteristics of a credit score?

Reflects repayment and debt management performance;

opens doors to better loan terms and rent applications;

dynamic, changes over time based on performance;

doesn't reflect who you are as a person

What can a good credit score unlock?

Approved for a mortgage; approved for an auto loan; approved for a credit card; approved for an apartment; lower interest rates, which means more money in your pocket

Which consumers are most affected by lowest credit scores?

Young consumers;

Black and Hispanic consumers; consumers living in lower-income neighborhoods;

new credit users;

consumers with previous credit blemishes

What is THE CATCH 22 of credit?

ower-income individuals are most likely to be denied credit, but are also most likely to benefit from low-interest credit since they have less savings

What are the issues with credit scores?

Bank stability depends on borrowers repaying debt; evaluating borrowers individually is time-consuming and inefficient and leaves room for biases; approving someone for a loan they cannot afford can be harmful; less predictive for consumers with limited credit history; scores reflect previous actions not current or expected changes; scores are relied on too heavily, limiting access to credit for those who may be credit-worthy

What is BNPL?

Short-term loan that lets shoppers split the payment of products into smaller, interest-free payments over a set period of time

Credit Card vs. BNPL: How do you qualify?

Credit card: have to apply and qualify. BNPL: minimal requirements to qualify

Credit Card vs. BNPL: How does it affect credit?

Credit card: good payment history builds credit. BNPL: does not build credit

Credit Card vs. BNPL: How does interest work?

Credit card: charges interest after grace period. BNPL: free short-term loan with no interest, but charges fees if not paid on time

Credit Card vs. BNPL: How does payment work?

Credit card: minimum payment is usually smaller, takes longer to pay off. BNPL: purchases are designed to be paid off in a shorter period of time, interest-free

What are new ways to build credit?

Rent and utility reporting; credit building debit cards

What are traditional ways to build credit?

Credit Builder Loans; Secure Cards; Become an authorized user

What happens to hiring trends when credit checks are banned?

Increased employment of residents in the lowest credit score areas, specifically in higher-paying jobs and the public sector; created worse outcomes for those with mid-to-low credit scores, applicants under 22 years old, and for Black applicants

What is a credit report?

Statement that has information about your credit activity and current situation such as loan paying history and the status of your credit accounts

What is the FICO score range?

300–850

740= great

below 670 is fair/poor

Where do you start when building credit?

You don't start at 300 — more like 600, and it will continue to grow

What is the anatomy of a credit score?

Payment history 35%;

Amount owed 30%;

Length of history 15%;

Types of credit 10%;

New credit inquiries 10%

Payment history: What is it and what is the tip?

Whether you pay on time (35%); tip: set up automatic payments

Amount owed: What is it and what is the tip?

Credit utilization ratio: amount you owe compared to how much credit you have available (30%); tip: keep credit utilization ratio under 30%, call and ask for higher limit

Length of history: What is it and what is the tip?

How long your credit accounts have been open (15%); tip: keep old cards active, adding new cards hurts the age of your history

What is revolving credit?

You can use up to a certain amount of credit, pay it off, and use it again (credit cards)

What is installment credit?

Pay for a lump sum loan over a set period of time with set payments (mortgage, auto loan)

New credit inquiries: What is it and what is the tip?

Applying for new credit can bring down your score (10%); tip: hard credit check impacts score for up to 2 years, apply for multiple of the same type of loan within 2 weeks when shopping for credit

What are hard inquiries?

Triggered by loan or credit card applications; visible to all credit report viewers; stay on report for up to 2 years; too many can harm credit

What are soft inquiries?

used for pre-approvals and background checks; used for rent or phone bill applications; include personal credit checks; only visible to you

What is the credit reporting cycle?

1. Creditors: ones who lend money; 2. Credit Bureaus: collect all information about each borrower's payment history in a Credit Report; 3. Creditors: then use credit report to determine whether to lend to a borrower

What are ways to build credit?

Apply for credit card; open a secure card;

report bill payment to credit bureaus;

be an authorized user on a card from an established card holder;

sign up for a credit building debit card online