The 60-Minute Guide to Understanding & Raising Your Credit Score Brought to you by: Ruth Schriefer, Iowa Co. FLE Peggy Olive, Richland Co. FLE Joint Council of Extension Professionals April 6, 2011

If winning isn’t everything, why do they keep score? - (the late, great) Vince Lombardi

Who cares about your credit? Creditors / Lenders Insurance Companies Landlords Employers Utility Companies Government Agencies YOU!

Credit Reporting Bureaus Equifax Experian TransUnion Who’s keeping score?

Fico Score most widely used Vantage Score – 3 Bureaus Many other “score” brands Credit Scores

Through your credit history found in your credit report: How you’ve paid your debts How much debt you have Whether you’ve made payments on time How do they keep score?

Identifying information Credit history Inquiries Public record information What’s in your credit report?

Credit reports DON’T contain… Checking or savings account balances Income Medical history Purchases made with cash or checks Business account information Race, gender, religion, national origin Driving record

Credit Cards Debit Cards Prepaid Debit Cards Secured Credit Cards What’s in & what’s out?

How to Read Your Credit Report  Check to make sure you are aware of all accounts listed and balances are what you expect.  Look for anything suspicious in the section that lists who has received copies.  Make sure no inquiries have been made about loans or leases you didn’t apply for. (continued)

How to Read Your Credit Report  Check for addresses where you never have lived.  Check for typos in your social security number.  If incorrect information, contact the creditor and the Credit Bureau. Follow up with a letter. Report the problem quickly and in writing.

FREE Credit Report Annual Credit Report Request Service PO Box Atlanta GA Order your report from each of 3 bureaus every 12 months.

Keep an eye on your credit report to keep up your credit score.

What does my score mean? What is a good score? –Most lenders consider to be very good. A good credit score doesn’t just mean that you’ll get a loan, it also means you’ll pay less for it.

Source: FICO© Score Trends Service; retrieved from 4/3/11.

FICO Score Source: Fair Isaac Corporation,

Factors That Determine Your Score 35% - Your Payment History Lenders want to know how you have handled credit payments in the past.

Credit CARD Act of 2009 Grace Periods –21 calendar days from time of mailing –Bans weekend deadlines, due dates that change each month, and cut off times earlier than 5:00 pm Payments –Bans issuing a charge for paying a bill by phone or online (except if use a service rep) Bans “Universal Default”

Factors That Determine Your Score 30% - Amount Owed & Available Credit The amount you owe on a mortgage, car loan, and other outstanding debt, along with your total available credit.

Credit CARD Act of 2009 Opt-In to Over-Limit Fees –Have to get your permission to process transactions that would place the account over the limit; can only charge once per bill Balance Payments –apply payments to the highest interest balance first –Bans use of balance in a previous month to calculate interest charges on the current month ("double-cycle“)

Current Credit Card Balance = $1, Minimum Payment Due = $18 Due Date = 21 days If you make no additional charges on this card and each month you pay… You will pay off the balance on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 12 years$2,685 ( in interest) $553 years$1,977 (Savings = $708) New “Black Box” Warning

Factors That Determine Your Score 15% - Length of Credit History How long you’ve had credit accounts and the average age of your accounts.

Credit CARD Act of 2009 NO credit cards if you’re under 21 –unless the application is co-signed by parent –proof of ability to repay the debt Cannot raise credit limit without co-signer consent No more ‘gifts’ on campus BUT…

Factors That Determine Your Score 10% Each – New Credit & Types of Credit Used How long since you opened up a new credit account and the different types of credit accounts that you have (mortgage, auto loan, student loan, credit cards, etc.).

Credit CARD Act of 2009 Creditor must consider ability to pay before raising limits or issuing a new card First Year Protection: –Terms must be clearly spelled out and stable for the entire first year. –Firms may continue to offer promotional rates with new accounts or during the life of an account, must last at least 6 months. BUT…

As of January 1, 2011 If your credit score and/or report was used for a credit decision about you, you’ll get: Credit Score Disclosure (CSD) Notice and / or Risk-Base Pricing (RBP) Notice or else only Adverse Action Notice

To Purchase your Credit Score To Estimate your Credit Score under “calculators” For Free Credit Score: