CREDIT REPORTS How important is your credit score? What do we already know? What do we want to know? When would a credit report get pulled?

What is in a credit report?credit report? Identifying information –Social Security Number –Name –Address History –Date of Birth –Employment History Not used in determining your credit score

Credit Summary Summary of all your debts –Installment credit –Revolving credit Public Records –Bankruptcy –Court Ordered Judgments Collections –Current or previous

TRADES (CREDIT ACCOUNTS) Accounts When were they opened Type of account Bank / Account # Highest & Current balance Payment History Delinquency

Credit Inquiries Which financial institutions have requested to see a copy of your report? –Company Name and Date of Inquiry –Does not show if you request a copy of the report Why is this important? –Shows for 2 years but only factors into FICO score for 12 months

Reading a Credit Report Look at the “Using A Credit Report Worksheet” Put your name at the top of the page Label all the parts of the credit report Answer the questions on page 2 of the document Turn the worksheet in to me

What is a FICO Score? Predicts whether you have the Capacity, Character and Capital to repay a debt Takes into consideration... –How much you owe? –Do you have new credit? –What types of credit do you have? –How long have you had credit? –Do you pay on time?

How is it Calculated?

Benefits of Credit Scores Makes credit more easily accessible Lowers the cost of granting credit Removes bias

WHAT DOES IT MEAN?

Based on Credit Approval Credit Cards –Macy's Department StoreMacy's Department Store Products –Sprint Cell Phone OffersSprint Cell Phone Offers Installment Loans –Car LoanCar Loan

What would you do? Read the Scenario As a group, discuss and list the advantages and disadvantages of giving credit Come to a group decision and record your answer

Scenario 1 You are 20 years old and are a full time college student. You are living on campus and work part-time at the bookstore. Your parents are paying your tuition. You have one credit card which you have had for eight months. You have used it occasionally and paid it off in full each month. You have no other established credit – You have a credit score of 700 You are requesting a loan for a used car in the amount of $1000.

Scenario 2 You are 45 years old – you work full time for a trucking company earning a salary of 55,000 a year. You have five credit card accounts with a total of 23,000 in revolving credit. You have three instances in the last two years where you have been at least one payment behind on your credit card. You also have a mortgage which you have paid on time for the last 5 years. You have a credit score of 680. You are applying for a $22,000 loan for a new car.

Scenario 3 You are 72 years old and have two credit cards which are only used infrequently and a current balance of $1500. Your credit is only six years old. You live on a fixed income of $3500 a month. You own your home (no mortgage payment) but have a car payment of $252 a month. You have a credit score of 780. You are applying for a new credit card with a $5000 credit line.