Transcript Credit Reports & Credit Scores

Understanding Credit
Reports & Credit Scores
Presented by
Rich Call
Consumer Credit Counseling
Service
What We Will Cover

Credit Reports and Credit
Scores - What they are and how
they are developed.

Understanding the Reports –
How to read them and why they are
important.

Acting On the Information In
Them – What to do to maintain,
correct, or improve the information.
What is a credit report?

Detailed record of your history of borrowing
money and paying it back

Report card about your credit standing

Used by lenders, insurance companies,
landlords, and employers to determine
whether you have good financial habits

Credit reports are provided by credit bureaus
based upon information provided to them by
creditors on a voluntary basis
3 Major
Credit Reporting Companies

Equifax – www.equifax.com
800-685-1111

Transunion – www.transunion.com 800-888-4213

Experian– www.experian.com
888-397-3742

$12.00/$15.00 if through them for single report from
one company

Can also purchase trimerge reports that combine info
from all three onto one report. Price is higher.
Free Credit Reports

New law : one free copy of credit report
from each of three credit bureaus every
year.




www.annualcreditreport.com
1-877-322-8228
Annual Credit Report Request Service
P O Box 105281, Atlanta, GA 303485281
Credit score does not come automatically
with the free report.
Information on a Report

Identification & employment info

Account information & payment history

Collection accounts

Public record

Inquiries from creditors/potential
employers
 CREDIT
BUREAU REPORT
 -----------------------------------------------

IDENTIFYING INFORMATION
Public, Joe
15 Any Street
325 Broad St. Someplace, USA 55555
Sam’s plumbing Welder Nice City, America 33333 03/15/52
222-22-2222
-----------------------------------------------------------------------------------------------------------Trade Line information

Industry








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Date opened
Acct. Number High credit Balance Current rating Historical delinquency
Bankcard 05/03/92
xxxx1234
$5000
Current
90– 5 yr ago
Auto loan 05/03/01
xxxx3456 $15,000
$9750
Current
Retail
04/24/00
xxxx5678 $2500
$1200
30 days
Retail
04/05/02
xxx452
$800
$700
Current
Mortgage 06/05/99
xxx6789 $125,000 $115,000
Current
-----------------------------------------------------------------------------------------------------------Credit Inquiries
Date
Industry
Date
Industry
Date
Industry
12/04
Bank
5/04
Auto finance
01/04
Retail
-----------------------------------------------------------------------------------------------------------Public Record / Collection Items
7/03 collection $450
8/04 judgment $1500 Paid
12/0402/05 collection $250
Disputing Information
Fair Credit Reporting Act

The Dispute Process


Put it in writing – to CRA and creditor in
question
CRAs must investigate – within 30 days
Must delete what they can’t verify
 Must correct inaccuracies
 Must report back to you

Accurate Negative Information

Negative account information will be
reported for 7 years.

Bankruptcy info – 7-10 years.

Defaulted student loans, judgments
on loans, and lawsuits can be listed
longer per individual state statute
Credit Scores

A number developed from a calculation using
the info from your credit report.

Most widely used is the Fico Score
 Scores range from 300-850.

New Score being introduced called Vantage
Score
 Scores range from 501 - 990

The higher the score, the better risk you are
determined to be and the better rate you will
be eligible for.
Five Ingredients of a
FICO Score
Credit Score Ingredients
types of
credit
10% payment
new credit
history
10%
35%
amounts
ow ed
30%
length of
credit history
15%
Nationwide Range of FICO scores
Why is your Credit Score so important?

It is used by lenders to determine financial
responsibility

A bad score indicates that you are more at
risk - Could lead to:
 Higher fees and rates
 Being declined for new accounts
 No credit line increases
 Being rejected for jobs, apartments, or
insurance
Sample loan with credit scores
How a good FICO
score can save you
money:
$10,000 used car
loan for 48 months
Can result in an
extra $1920 in
payments over the
4 years
$279 monthly
payment
$239 monthly
payment
FICO score
below 590
Interest rate of 14.9%
FICO score
720+
Interest rate of 6.9%
Improving Your Score

Pay bills on time

Reduce debt

Keep balances low / credit limits

Apply for & open new lines only
when you need them.

Check your credit report for
accuracy and clear errors as soon
as possible.
Putting Your Credit Report to
Work For You
It can be a tool to assess and improve creditworthiness
 Acts like a report card

Helps you create a goal-focused plan:
 Correct incorrect info
 Start paying bills on time
 Reducing debt
 Preparation for a meeting with a lender

Your goal? Successful credit application at
lowest cost to you possible.
More Information
CCCS
1-800-355-2227
www.cccservices.com
Federal Trade Commission
www.ftc.gov
Consumer website for credit scores
www.myfico.com
Recommended Reading
Your Credit Score – Liz Pulliam Weston
Dirty Little Secrets: What the Credit Bureaus Won’t Tell You
– Entrepreneur Press & Jason Rich