The importance of understanding credit reports The choices you make today directly impact your future. Your credit score can influence how much interest you pay when making a major purchase, such as a house or car. Employers may use credit reports to determine whether or not to hire someone. A poor credit score can result in higher insurance premiums or possibly the inability to be insured.

Credit reports Contain four types of information Identifying information – Social Security Number, address, date of birth, etc. List of accounts owed. List of agencies who have requested your credit history – includes landlords and employers. Public record information – includes collection accounts, bankruptcies, late payment of child support.

Credit reports Credit reports do not include: Balances in checking and savings account Your income Purchases made with checks or cash (including debit cards) Personal info such as race, gender, religion, national origin or driving record.

Who sees your report? Credit bureaus can provide information only to the following requestors: Creditors who are considering granting or have granted you credit Employers considering you for employment, promotion, reassignment or retention Insurers considering you for an insurance policy or reviewing an existing policy Government agencies reviewing your financial status or government benefits Anyone else with a legitimate business need, such as a landlord.

Who should NOT see your Credit Report? Co-Workers Significant Others Prospective boyfriend/girlfriend Parents Prospective In-Laws Siblings

Potential Employers and Credit Scores Credit checks can be a valuable tool in assessment of judgment of potential employees Bad credit can be a sign of irresponsibility Employers may also fear that you will worry more about your finances than your job It’s estimated that between 35 and 50 percent of employers check credit scores

Who Uses Credit Reporting Agencies? Credit card companies Banks/credit unions Auto dealerships Landlords Utility companies Service providers Potential employers Insurance companies

Excellent750 – 850 Good660 – 749 Fair620 – 659 Poor350 – 619 *Source: BCS Alliance.com

Payment history Amounts owed Length of credit history New credit Types of credit used

Payment History – 35% Do you pay your bills on time? Number of past dues and how far past due on each Collection accounts, bankruptcies, judgments Amounts Owed – 30% Amount owing on accounts. Ex: revolving credit Number of account balances Proportion of credit lines used and installment loan amounts still owing

Length of Credit History – 15% Time since accounts opened Time since account activity New Credit – 10% Number of recent opened accounts Number of recent inquiries Types of Credit Used – 10% Credit cards, installment loans, mortgages, student loan, etc.

*Source: MSN Money - FICO Effect on a 680 ScoreEffect on a 780 Score Maxed-out card -10 to to day late payment -60 to to -110 Debt Settlement -45 to to -125 Foreclosure -85 to to -160 Bankruptcy-130 to to -240

Payment history – 35% Pay your bills on time Paying off collection accounts will not remove it from your credit report Contact your creditors if you are having trouble

Balances Due– 30% Keep amounts low on revolving credit Pay off debt rather than moving it around Don’t open a number of new credit cards you don’t need Time in Credit Bureau– 15% Don’t open a lot of new accounts to fast if you have not had a long credit history

New Credit – 10% Re-establish your credit history if you have had a bad past FICO scores distinguish between searches for a single loan and searches for new credit lines Credit Used – 10% Apply for and open new credit accounts only as needed Manage credit cards responsibly Closing an account does not make it go away

Get a copy of your credit report from one of the three reporting agencies (Experian, TransUnion, Equifax)