Transcript Give me a little credit

Give me a little credit
©2012 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or regi stered trademarks of
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Learning objectives
Give me a little credit
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©2012 Experian Information Solutions, Inc. All rights reserved.
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Understand the content of credit reports, how
information is collected, and how long it remains
Learn who has access to reports and where
to access your own
Understand the role of credit reporting in our lives and
the benefits of maintaining a positive history
Learn how to use and manage credit to build a positive
history
Know where to go to get helpful and accurate
information about credit reports and the questions you
may have about them
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If I had a million dollars...
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Credit
It is a privilege you earn
The choice is yours
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What is credit?
 Credit is using services or making
purchases of things you need when you
need them, and then paying at an agreed
upon time under agreed upon terms
 Common types include credit cards,
mortgages and car loans
 Service contracts, such as cable and
telephone, can also be considered credit
 Financial trustworthiness
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Your credit record is one of the most
important factors lenders consider
when you apply for credit
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What is credit?
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The three national credit reporting companies
 Credit reporting companies serve
consumers and businesses
by making possible:
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Instant credit
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Lower-cost credit
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Nationwide credit
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Widespread availability
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Account management
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The credit cycle
You pay lender
Credit
reporting
companies
share
with new
lenders
Lender
updates
records
Lender shares history with
credit reporting companies
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Credit reporting companies are like libraries
Credit reporting company clients check out information …
… If they have a permissible purpose under the law
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Defining credit reports and their importance
What is a credit report?
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Your personal credit report includes
a record of your financial accounts
and obligations and the identification
information associated with them
This report is sometimes called
a credit file or a credit history
Credit reporting companies collect and
organize data about your credit history
from your creditor's and public records
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Defining credit reports and their importance
Why is it important?
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Your credit report serves as your financial
references to companies with whom you
want to do business
Lenders use credit reports and credit scores to
gauge the likelihood that you will pay back a loan
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A strong credit history enables you to obtain
a credit card, home and auto loans and many
other valuable credit services, and can affect
the amount that you pay for those services
Reports are also used in other non-lending
situations – employment checks, apartment
rental applications, etc.
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The Fair Credit Reporting Act
Permissible purposes
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Open or manage credit accounts
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Offers of credit
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Employment purposes
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Underwrite insurance
 A business transaction initiated by the consumer
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Court order or federal jury subpoena
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Valuation of risk of an investor
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Eligibility for government license
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Disclosure to consumer
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The players in the credit cycle
Credit
reporting
companies
The
government
You
Lenders
Risk score
modelers
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What’s in a credit report?
 Identifying information
 Account information
 Public record information
 Inquiries
 Dispute instructions
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Information comes from you
Information you
provide in an
application for credit,
housing, or insurance
is reported to credit
reporting companies
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How long is information kept on a report?
Open accounts in good standing
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Indefinitely
Closed accounts in good standing
10 years
Late or missed payments
7 years
Collection accounts
7 years
Civil judgments
7 years
Chapter 7 bankruptcy
10 years
Chapter 13 bankruptcy
7 years
Unpaid tax liens
10 years
Paid tax liens
7 years
Credit inquiries
2 years
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What’s NOT in a credit report?
 Credit reporting companies do not store:
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Criminal background
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Medical information
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Buying habits / transaction data
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Bank account information
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Credit scores
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Common myths about credit reporting
When paid,
the bad debt
will go away
Consumers must
give their
permission for a
report to be issued
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The credit
reporting
company
denied me
credit
I’m not
responsible for
those charges
on our account
Requesting your
own report and
preapproved
offers harm
your credit history
A divorce
decree
separates
joint accounts
There is only
one credit score
and it is on
every report
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What is a credit score?
 Used instead of a manual “score sheet”
 Valuable risk management tool
 Many different models, with many different scales available from many
different sources
 Credit reporting companies often apply the model selected by the creditor when
delivering the credit report; however, the credit scoring model, or formula, is
proprietary to the developer and is not known by the credit reporting company
824
513
780
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657
456
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Risk factors are the key
 Generated when a risk score is calculated
 Tell the consumer what to address in their
credit history to become more creditworthy
 Are largely consistent from model to model
 Are usually included in or described
in an adverse action notice
 Experian provides both positive and
negative factors to consumers with
scores it provides through its
direct-to-consumer services
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Vantage Score Comparison
Repayment behavior (satisfactory, delinquency, derogatory)
Percentage of credit amount used/owed on accounts
Amount of recently reported balances (current and delinquent)
Length of credit history and types of credit
Number of recently opened credit accounts and credit inquiries
and other recent account activity
Amount of credit available
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Ten rules for managing credit
1. Establish a credit report
2. Always pay as agreed
3. Get a credit card
4. Use caution in closing accounts
5. Apply for credit judiciously
6. Time is key
7. Demonstrate stability
8. Have a plan
9. Put credit to work for you
10. Share your knowledge
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Centralized source for free reports
www.annualcreditreport.com
 One every twelve months
 Single contact point
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Telephone – 877 322 8228
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Mail
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Internet
 Fee for credit score disclosure
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Resources
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Free annual FACT Act credit report
 www.AnnualCreditReport.com
Access to free report from each of the three credit reporting
companies
Experian
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www.Experian.com credit education
Ask Max advice column, sample consumer report, frequently asked
questions
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Experian Credit Educator: 877-901-6909
Personalized review and guidance about your credit report and score
by an Experian professional for a nominal fee.
www.FreeCreditScore.com
Access to credit monitoring and unlimited Experian credit reports and
scores
www.VantageScore.experian.com
Purchase a scored report and learn about scores
www.LowerMyBills.com
Free online service for consumers to compare low rates on monthly
bills and reduce the cost of living
www.PriceGrabber.com
Free online comparison shopping service to help consumers find
lowest prices for goods and services
www.ClassesUSA.com
Assistance in locating college education resources
www.AutoCheck.com
Vehicle history reports to help consumers ensure they make good preowned auto purchasing decisions
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Education partners
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www.lifesmarts.org
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www.jumpstart.org
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Test your knowledge
What history does your credit report contain?
Student loans
Car loans
Credit cards
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All of the above
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Test your knowledge
What is likely to happen to your credit score when you pay your bills on time
and / or reduce your credit card balance?
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Gets better
Gets worse
Stays the same
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Test your knowledge
You are entitled to a free copy of your credit report...
Once a day
Once a month
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Once a year
Once a lifetime
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Test your knowledge
Which organizations maintain consumer credit records?
Equifax
Experian
TransUnion
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All of the above
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Test your knowledge
Missed payments will remain in your credit history...
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Up to seven years
Up to ten years
Until they are paid
Forever
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Test your knowledge
Additional questions for review or activity development
 Why is it important for consumers
to have a credit report?
 Can a credit report save a consumer money?
 Who has access to credit reports?
 What is included in a credit report?
 How long does negative information remain
in a report?
 How can consumers view their credit reports?
 How do consumers dispute information in their
report?
 How long does it take for disputes to be
completed?
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Test your knowledge
Additional questions for review or activity development
 Do they need to dispute with all three credit
reporting companies?
 How can you build a credit history when you
have no credit?
 What can consumers do to ensure that they
have a strong credit history?
 How does getting married affect your
credit history?
 How does getting divorced affect your
credit history?
 What resources are available to help consumers
better understand credit reporting?
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