1. Credit, Credit Scoring & Identity Theft

2. Presentation Objectives Harvard University Credit Union Overview Credit – The Three Cs Credit Report Basics Identity Theft Credit Score 101 Contact Information

3. About the Credit Union The Harvard University Credit Union is a financial institution exclusively serving the students, alumni, faculty, and staff of Harvard University and the affiliated hospitals. Family members are also eligible. Member Owned Every member is an equal shareholder Volunteer Board of Directors elected by the membership Our mission to provide our members with financial empowerment and education. Although we offer a full range of banking products, we are very proud of the fact that we are not a bank

4. Credit Basics Credit – Utilizing something now (e.g. education, car or home) and paying for it over a period of time. 3 Cs of Credit Character – How well do you honor your financial obligations Capacity – How easy will it be for you to repay the debt Collateral – Will the loan be secured by something

5. Credit Bureau Report Information on Credit Character Credit Bureaus Collects information about the creditworthiness of individuals.creditworthiness Distribute a credit report which contains all the information relevant to a person and the credit score calculated by the agencycredit report Three major credit reporting agencies Equifax TransUnion Experian

6. Whats on the Credit Report? Personal Information Names, current & previous addresses, employers, date of birth Credit Information Credit granted and history & timeliness of repayment, revolving, installment or open ended, payment patterns for past 7 years Public Record Information Records found on public documents: bankruptcies, tax liens, collection accounts, overdue child support Inquiries List of creditors and agencies who have requested your credit report

7. Who Reviews Your Credit? Employers Landlords Automotive dealers Professional licensing boards Insurance companies Financial lenders Others

8. Getting Your Credit Report www.Annualcreditreport.com Receive a free copy of report from each of 3 bureaus - order report every 4 months to monitor Must provide free if denied credit within 60 days Review for accuracy annually Dispute incorrect information MYFICO.COM

9. Annualcreditreport.com

10. Identity Theft Financial Identity Theft Where do thieves obtain information? Trash – discarded ATM receipts, bank receipts etc. On-line: Facebook, etc. E-mail- phishing scams Stealing credit cards/ wallet Public records Infiltrate IT systems – WIFI

11. Who Can Be a Victim of Identity Theft? Anyone Tiger Woods, Will Smith, Ted Turner, Martha Stewart CEOs Grandparents Children College students 7 million people last year

12. Identity Theft How to Protect Yourself Shred mail and account information Dont advertise on-line – DOB Never provide personal information without verification Confirm website/ WIFI security before using Check your credit every four months

13. Repairing Credit Errors Occur with Credit Reporting Information Law is in consumers favor to resolve items Money Management Workbook provides more information on resolution process

14. What Is Credit Scoring ? Credit Scoring is a system used to facilitate decision making Method of converting large amounts of difficult to compare data into a single point score that facilitates comparison Process of analyzing past performance trends to predict future performance

15. What Is Your Credit Score? Forecast of how well you will repay a loan as agreed during the next 24 months the higher the score, the better the model indicates that you will repay Snapshot of your credit history at a particular point in time Only includes factors related to an individuals credit Always changing

16. Credit Score Ranges Fair Isaac, Co – Founded in 1956 FICO Scores range – 300 to 850 Only 18% of population have a FICO Score of 800 or better 7% of population have scores below 500

17. Credit Score Factors Payment History – 35% Amounts Owed – 30% Length of Credit History – 15% New Credit – 10% Types of Credit in Use – 10%

18. Score Factors: Payment History Payment history on all accounts Payment information on types of accounts Public records Number of accounts with no late payments Details on late payments Severity, frequency, how recent, amount How to Improve Pay Bills on time If you miss a payment, get current Ask for help with lender

19. Score Factors: Amount Owed Amount owed on accounts Balances compared to high credit or original balance Number of accounts with balances How to Improve Keep balances low on credit cards Dont open multiple credit cards Pay off debt rather than moving it around

20. Credit Impact: Slow Payments One 60 day delinquency can decrease a credit score by… 50 75 100 200 points

21. Credit Impact: Rates and Payments Credit ScoreAPRMonthly Payment 720-8505.204%$752 690-7196.728%$769 660-6898.666%$791 620-65912.235%$833 590-61918.141%$906 500-58919.258%$920 <500Not eligible Source: Myfico.com – 36 month car loan - $25,000

22. Poor Credit: Costs vs. Savings Mortgage costs – extra $200 to $300 per month per $100,000 borrowed Insurance costs, credit card costs, other borrowing - $100s extra per month Pay extra for borrowing or pay yourself…

23. Managing Credit Obtain a copy of your credit report every four months Annualcreditreport.com Protect yourself from identity theft Loose paper, date of birth Pay your bills on-time Build your credit history - methodically