Understanding Your Credit

There are three major credit reporting agencies in the United States that maintain records of your use of credit and other information about you. The credit reporting agencies are: There are three major credit reporting agencies in the United States that maintain records of your use of credit and other information about you. The credit reporting agencies are: Equifax Equifax TransUnion TransUnion Experian Experian

When youre applying for credit, whether it is a credit card, a car loan, a personal loan or a mortgage, lenders want to know your credit risk. When youre applying for credit, whether it is a credit card, a car loan, a personal loan or a mortgage, lenders want to know your credit risk. In order for lenders to determine your risk, they must pull a Credit Report. In order for lenders to determine your risk, they must pull a Credit Report.

Whats in your Credit Report? Identifying Information Identifying Information Your name, address, Social Security number, date of birth, and employment are used to identify you. Trade Lines Trade Lines These are your credit accounts. Lenders report each account you have established with them. Credit Inquiries Credit Inquiries When you apply for a loan you authorize your lender to ask for a copy of your Credit Report. This is how inquiries appear on your Credit Report. There are two types of inquiries: * Voluntary (request made by the consumer YOU) * Involuntary (request made by lenders to make you pre-approved for a product).

Whats in your Credit Report? The inquiries that are requested by a lender as a result of a completed application will affect your credit score. The inquiries that are requested by a lender as a result of a completed application will affect your credit score. Inquiries made by you, businesses that offer services or goods, and prospective employers will not affect your credit score. Inquiries made by you, businesses that offer services or goods, and prospective employers will not affect your credit score.

Credit Score: What is it? Credit score is based solely on data stored at the major credit bureaus. Credit score is based solely on data stored at the major credit bureaus. Equifax Equifax TransUnion TransUnion Experian Experian It offers a snapshot of a consumers (your) credit risk at a particular point in time and rates the likelihood that the consumer will repay debts as agreed. It offers a snapshot of a consumers (your) credit risk at a particular point in time and rates the likelihood that the consumer will repay debts as agreed.

Whats in your Credit Score? Credit Scores are calculated from a lot of different credit data in your file. Credit Scores are calculated from a lot of different credit data in your file. The data can be grouped into five categories: The data can be grouped into five categories: Payment History Payment History Amounts Owed Amounts Owed Length of Credit History Length of Credit History New Credit New Credit Types of Credit Used Types of Credit Used

Whats in your Credit Score?

Whats in your Credit Score? Payment History: Account payment information on specific types of accounts Account payment information on specific types of accounts Presence of adverse public records (liens, judgments, suits), collection items and/or delinquency. Presence of adverse public records (liens, judgments, suits), collection items and/or delinquency. Severity of delinquency. Severity of delinquency. Time since past due items. Time since past due items. Number of past due items on file. Number of past due items on file. Number of accounts paid as agreed. Number of accounts paid as agreed.

Amounts Owed Amount owed on accounts Amount owed on accounts Number of accounts with balances Number of accounts with balances Proportion of credit line used (Revolving Accounts) Proportion of credit line used (Revolving Accounts)

Length of Credit History Time since account opened. Time since account opened. Time since account activity. Time since account activity.

New Credit Number of recently opened accounts Number of recently opened accounts Time since recent account opening Time since recent account opening Number of recent credit inquiries Number of recent credit inquiries Re-establishment of positive credit history following past payment problems Re-establishment of positive credit history following past payment problems

Types of Credit Used Number of various types of accounts Number of various types of accounts credit cards credit cards retail loans retail loans mortgage mortgage

Whats not in your score? Race, color, religion, sex, national origin, marital status Race, color, religion, sex, national origin, marital status Age, Housing Location Age, Housing Location Certain types of inquiries Certain types of inquiries

How does scoring help you? People get loans faster. People get loans faster. Credit decisions are faster. Credit decisions are faster. Credit mistakes count for less. Credit mistakes count for less.

Improving your score Pay your bills on time. Pay your bills on time. If you have missed payments, get current and stay current. If you have missed payments, get current and stay current. Keep balance low on credit cards and other revolving credit. Keep balance low on credit cards and other revolving credit. Pay off debt rather than moving it around. Pay off debt rather than moving it around. Do not open a lot of new accounts too rapidly. Do not open a lot of new accounts too rapidly.

How Credit Report mistakes are made Names (Robert Jones, Bob Jones) Names (Robert Jones, Bob Jones) Clerical error Clerical error Inaccurate Social Security number Inaccurate Social Security number Payments applied to the wrong account Payments applied to the wrong account

Fixing Errors Contact the credit bureau and the company that provided the information by certified mail. Contact the credit bureau and the company that provided the information by certified mail. The credit bureau has 30 days to investigate. The credit bureau has 30 days to investigate. Include supporting documentation Include supporting documentation Always request deletion or correction Always request deletion or correction

Know your rights The Fair Credit Reporting Act (FCRA) The Fair Credit Reporting Act (FCRA) This act is designed to help ensure that credit bureaus furnish correct and complete information to businesses to use when evaluating your application. This act is designed to help ensure that credit bureaus furnish correct and complete information to businesses to use when evaluating your application.

Know your rights The Equal Credit Opportunity Act (ECOA) The Equal Credit Opportunity Act (ECOA) –This act prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, and age.

Know your rights The Fair Credit Billing Act (FCBA) and The Electronic Funds Transfer Act (EFTA) The Fair Credit Billing Act (FCBA) and The Electronic Funds Transfer Act (EFTA) These acts establish procedures for resolving mistakes on credit billing and electronic funds transfer account statements. These acts establish procedures for resolving mistakes on credit billing and electronic funds transfer account statements.

Know your rights The Fair Debt Collection Practices (FDCPA) The Fair Debt Collection Practices (FDCPA) This prohibits debt collectors from engaging in unfair deceptive practices while collecting debt. This prohibits debt collectors from engaging in unfair deceptive practices while collecting debt.

Know your rights Debt collectors can only call between the hours of 8 a.m. and 9 p.m. Debt collectors can only call between the hours of 8 a.m. and 9 p.m. Debt collectors may not call you at work if they know your employer disapproves. Debt collectors may not call you at work if they know your employer disapproves. Debt collectors may not harass, oppress, or abuse you. Debt collectors may not harass, oppress, or abuse you.

Contacts Equifaxequifax.com PO Box Atlanta, GA ExperianExperian.comTransUnionTransunion.com PO Box 6790 Fullerton, CA

Thank you for your participation! I hope this information has given you some useful tips. If you have any suggestions for future seminar topics, please see Mrs. Edwards or another Student Support Services staff member. If you are viewing this workshop online, please come by Student Support Services, 109 Eldridge Hall, and complete an Academic Seminar Evaluation form, so that we may have documentation of your program participation. You may also print this form online. EXIT EXIT