Transcript Credit Reports & Scores 2012

Building a Positive
Credit Report
Presentation by Dr. Jean Lown
Financial Planning for Women
 April 11, 2012
1
Overview
 Credit Report
 How & why to get your free report
 Credit Bureaus: The big 3
 Credit Score
 What it is
 How it is used
 What’s a ‘good’ score?
2
What is a credit report?
 Definition:
A continuing record
of a borrower’s debt
commitments and
how well they have
been honored.
3
How do you build a credit history?
 Time and good behavior
 Start with a low limit credit card
 “You don’t have to carry over a balance, but
you do need to use it.” –Rod Griffin, Experian
 Small loan
 For vehicle?
 Pay on time
 Use less than 50% of your credit limit
4
Other ways to get credit
 Use a co-signer
 Get a secured credit card
 Document proof of paying rent, utilities,
insurance, etc. as an alternative form of
credit
5
Who Can Look at Your Credit
Report?
Creditors – new & current
Employers & prospective employers
Insurance companies
Government agencies
Anyone else with a legitimate business
reason (i.e. landlords)
6. You
1.
2.
3.
4.
5.
6
What is in a Credit Report?
1. Identifying information

Name, current & past addresses, SS#
2. Credit use information


Active and inactive accounts
Payment history
3. Public record information

Criminal convictions, foreclosures, lawsuits
4. Inquiries

by creditors & your applications for credit
7
What to look for
 Potentially negative items
 Open accounts:
 Status of accounts:
 open/never late is good
 closed, past due, maxed out limit, etc.
8
Find wrong information?
 Contact credit bureau
 Report explains how to correct mistakes
 Is it your mistake?
 Spouse could have taken on debt
 Company name is different than you
recognize but really your account
 Bought electronics, etc; store provides credit
through finance company
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Negative Information?
 Can write 100 word explanation that goes
out with credit report.
 legitimate reason for problem
 Business went bankrupt due to 2008 crash
 lost job, was ill, etc.
 Negative Information should be removed
after 7 years
 10 years for bankruptcy
10
Close accounts you aren’t
using?
 Consider impact on credit score if your
credit utilization ratio increases
 Gradually close unused accounts
11
CBs do NOT decide if you
get credit!
 Each lender makes a decision
 Lenders offer range of loan/card rates
based on your credit score
 Stay tuned to learn about credit scores
12
Free Annual Credit Report
 Get a free credit report once/year/credit
bureau: Experian, TransUnion, Equifax:
 http://www.annualcreditreport.com
 1-877-322-8228
 Order 1 free report every 4 months to
monitor for identity theft
 Mark calendar: April, August, & December
13
Q on Credit Report?
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Credit Scores
 Determines what you will pay for credit
 Higher score = lower cost credit
 http://www.myfico.com/HelpCenter/FICOScores/Curious.aspx
 FICO=Fair Isaac Company
http://www.fico.com
 3 Scores: 1 for each credit bureau
 Average is 678; range from 300-850
 Most scores are in the 600s-700s
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FICO Score
 Score is based on:





Payment history (35%)
Outstanding loan balances (30%)
Length of credit history (15%)
Inquiries (10%)
Types of credit (10%)
 Variety is good: credit cards, vehicle loan,
mortgage
 Avoid finance companies
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Estimate your FICO Score
 Range: 300-850
 http://www.bankrate.com/calculators/creditscore-fico-calculator.aspx
 About FICO Scores:
http://www.myfico.com/Default.aspx
 (click on “About FICO Scores” near middle
of page)
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Be Aware of Scams
 Debt relief companies
 Credit repair scams
 Claims to repair your credit are just not true.
 Only time, effort and a plan to repay your
debt will improve your credit report.
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Summary




Order a free credit report today
Educate yourself at FTC.gov
Build a strong credit history
Use credit cards prudently
 2 cards are enough
 Pay in full at end of month or be a debt slave
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Resources
 Federal Trade Commission
 http://www.ftc.gov/bcp/menus/consumer/credit.shtm
 Credit reports & credit scores
 http://www.federalreserve.gov/creditreports/default.htm
 Myfico.com
 Credit Education Center
 http://www.myfico.com/CreditEducation/
 Housing & Financial Counseling @ USU
Family Life Center
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May 9 FPW
& PF magazine give-away
 The best mutual funds for your IRA
 Learn about Individual Retirement
Accounts
 Types of mutual funds
 Specific funds selected by Advanced
Family Finance class
 Students have done the research
 They will recommend specific funds
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