Credit 1

📚 Module 1: Understanding Credit Reports & Scores

"Mastering Your Credit Foundation"

Welcome to Grahamith Global Solutions' Credit Education Course.

In this first lesson, we’re building your foundation — understanding how credit really works, what the reports show, and why every number matters.

You cannot fix, grow, or teach credit without first understanding how it’s built and judged.

Let’s dive in.

🧠 Main Teaching Points

1. What Makes Up Your Credit Score

Your credit score isn’t random — it’s based on five major factors:

Factor	Weight	What It Means
Payment History	35%	Did you pay bills on time?
Credit Utilization	30%	How much of your available credit you are using
Credit Age	15%	How long your accounts have been open
Credit Mix	10%	Different types of accounts (credit cards, car loans, student loans)
New Credit	10%	How many times you've applied for new credit recently

Example:
If you have a $1,000 credit card and you spend $900, your utilization is 90% — that's bad for your score. Ideally, keep it under 10%-30%.

Student Action:
✅ Write down: What are your top 2 strongest areas? What needs the most work?

2. FICO vs. VantageScore

There are two main scoring models you’ll hear about:

• FICO is used by 90% of major lenders for real loans and approvals.
• VantageScore is commonly seen on free educational apps like Credit Karma or Credit Sesame.

Key Tip:
A Credit Karma score can look 20–40 points higher (or lower) than your FICO score.
Always know your real FICO score when preparing for major approvals (home, car, business loans).

Student Action:
✅ Find out today: Are you looking at FICO scores or VantageScore?

3. How to Read a Credit Report

Your credit report is divided into key sections:

• Personal Information — Name variations, addresses, employers, birth date
• Account Information — Open accounts, closed accounts, balances, limits, payment history
• Public Records & Collections — Bankruptcies, liens, judgments, debt collections

Example:
If your credit report lists an old address where you never lived, it could signal identity confusion — and that affects your credit trustworthiness.

Student Tip:
✅ Always check for mistakes! Even a small personal information error can cause a dispute delay later.

Tip to Share: Errors Are Common

More than 1 in 5 credit reports contain mistakes, according to the FTC.
Wrong addresses, duplicated debts, or wrong late payment entries are all reasons you can (and should) dispute.

Federal Law Reminder:
The Fair Credit Reporting Act (FCRA) gives you the right to challenge anything inaccurate, outdated, unverifiable, or incomplete.

Student Action:
✅ Make a list of any errors you already know exist on your credit report.

4. Soft Inquiries vs. Hard Inquiries

Not every credit check impacts your score the same way:

Type	Example	Impact
Soft Inquiry	Checking your own score, employer pulling credit for hiring	No impact
Hard Inquiry	Applying for a credit card, loan, apartment, car loan	Lowers your score temporarily

Important:
Multiple hard inquiries in a short time (like applying for several credit cards in a week) makes you look like a risk to lenders.

Student Tip:
✅ Before applying for anything, ask: "Will this be a hard pull or a soft pull?"

🎯Lesson Recap:

Your credit score is a reflection of your financial behavior, not your worth.
The five factors create the roadmap — and now you know how to read the map.

Key Takeaway:
👉🏽 If you understand how credit is built, you can control it.
👉🏽 If you control it, you can fix it, build it, and teach it.

✅ Now that you’ve learned how credit works, next up:
The Laws That Protect You. (Because real power comes from knowing your legal rights.)