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 Three credit reporting bureaus:  Equifax  Trans Union  Experian  Information is not shared among bureaus unless required by law.  Not all creditors report.  NOTE: Because each bureau presents a unique report, a lender may get a report from all three. 2

 Information each creditor reports includes:  company name and account number  the individual responsible for the account  date opened  months reviewed  date of last activity (DLA)  high credit (capacity)  terms  balance and any past due notes  Typically, creditors do not report until a payment is late more than 30 days. The payment is late the day after it is due not the day the late fee is charged or the day it is reported.  Status (type of account & timeliness of payment)  date reported 3

 Handout on How to Read Your Credit Report  Let’s Watch FICO Score Video What's My FICO Score? - YouTube 4

 If a lender pulls your credit report, what will they see?  collections, judgments, liens, etc.  Length of time this information remains on a credit report: 7 years.  Length of time good credit remains on your credit report: 7 years  Length of time bad credit stays on your credit report: 7 years  Bankruptcy on a credit report:  Chapter 7 (debt eliminated) 10 years on credit report  Chapter 13 (debt reorganized) 7 years on credit report 5

 Credit reports can be accessed by creditors and other businesses if they have a business reason for needing the information:  Mortgage Company  Employer  Landlord  Inquiries from creditors:  Appear on a credit report any time a request is made  Remain on a credit report for 2 years  In excess, can look negative on a credit report because it implies that a consumer is “shopping” for credit 6

 Fair Credit Reporting Act of 1997  Consumer dispute process:  1. Consumer files with the credit bureau.  2. Bureau sends notice to creditor.  3. Creditor must respond within 30 days or disputed information is removed from file.  If you find an error on one report, send all the information to the other two credit bureaus. 7

 Fair and Accurate Credit Transactions Act (FACTA)  Consumers are entitled to receive one free copy of their credit report annually from each of the three major credit bureaus:  Online at  Call toll free

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 1. Making late payments  A single late payment could weaken your score by as much as points.  2. Carrying a big balance  The best thing you can do is pay your bills on time and pay as much of the balance as possible. Don’t have credit cards with balances close to their credit limit.  3. Closing a credit line  Closing a line of credit could impact your debt to utilization ration (30% of your credit score). 13

 4. Opening a credit line  A typical “hard” inquiry by a credit card company will lower your score by about 5 points, and the cost of opening a line of credit typically ranges from 5-15 points. *The temporary ding to your credit only lasts about six months.  5. Defaulting  Bad behavior example: A home foreclosure might knock 200 points off your score.  Good behavior example: Taking out a small loan and paying it off and keeping a low balance can get your score back up in the mid-600s or low 700s in a little over two years. 14

 If a creditor settles or writes off one of your debts worth more than $600 you will owe income tax on the unpaid debt.  You do not have to declare the debt as income if you discharged the debt in bankruptcy. 15

 Make it a GOAL (long or short)  Consistently pay on time  Pay more than due  Seek assistance and counseling  Does bad credit affect a renter?  Know your renter rights!  Credit and buying a home  Attend a local Home Buyer Class 16

 Stop incurring new debt  List whom you owe, total balances, monthly payments, APR  Develop a spending and saving plan to determine how much you have available for debt payments  Make a schedule of monthly payments  Go to for helphttps://powerpay.org 17

 Irregular expenses  Major goals such as home ownership  Emergencies  Investments  Start my own business  Buy Rental Property  Purchase Stocks 18

 Tips on How to Save: 1. Reduce outside entertainment and eating out. 2. Go shopping only when you need to and use coupons only for things you would normally buy. 3. Host a yard sale or garage sale. 4. Set up a special interest-bearing savings account. The money only goes in; no withdrawals are allowed. 5. Have a fixed amount (5-20%) deducted from your paycheck and put it into savings. 6. Put all lump sums (tax return, gifts, etc.) into savings. 19

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 Housing & Homeless Intervention Programs  Responsible Rides  Head Start (pre-school)  Children’s Health Improvement Partnership  To Our House (Winter Homeless Shelter)  Volunteer Income Tax Assistance 21