Credit: Reports and Scores Advanced Level

The Credit Process Credit – goods, services, and/or money received in exchange for a promise to pay back a definite sum of money at a future date Borrower Someone who receives something with the promise to return it or to repay what is borrowed Lender Person or organization who makes funds available for others to borrow Credit History Record of the borrower’s past loan and credit-related transactions

Key Definitions Credit score: a three digit number that summarizes how well a person or business has handled debt. The higher the number, the better. Credit limit/line: amount of money that can be charged to a credit card. The size of a credit limit, and how much of it has been borrowed, have a large influence on consumer credit scores. Invoice: another term for a bill; shows individual purchases and amount owed, including interest rates, fees, etc. Late fee: result of credit card company not receiving/posting your payment by the due date Minimum amount due/payment: lowest amount of money that you are required to pay on your credit card statement each month, usually 3-5%

Credit Reporting Agencies Three U.S. Agencies: - Equifax - Experian - TransUnion If credit has never been used (or reported) an individual will not have a credit report A person’s credit report may vary across the three CRA’s

Credit Account Information Specific information about each credit account you have or have had Types of Information Type of Credit Loan Amount or Credit Limit Date Account Balance Payment Information

Closed-end credit (installment) Open-end credit (revolving) Types of Credit Closed-end credit (installment) Open-end credit (revolving) Borrower repays a specified number of equal payments Line of credit established in advance Definition Contract outlines repayment terms Borrower chooses how much to pay Features Automobile loans Education loans Mortgages Examples Credit cards

Information from federal, state and county Public Records Information from federal, state and county public court records Collection Agencies Businesses hired by lenders to pursue payments on debts not paid back according to contract terms Bankruptcy When an individual or business is not able to repay outstanding debts Tax liens Taxes not paid in full Foreclosure Borrower fails to keep up with mortgage payments and the lender takes possession of the property Does Isabella have any public records?

Inquiry Information Potentially Negative Typically No Impact Seeking additional credit Typically No Impact Inquiries not initiated by you Impact is reduced if shopping for the same type of loan within a 14-day period Inquiries not related to credit Checking your own report