everything you ever wanted to know about credit · credit reporting agencies equifax p.o. box...

Everything You Ever Wanted to Know About Credit

What is Credit?

Confidence in a purchaser's ability and intention to pay, displayed by entrusting the buyer with goods or services without immediate payment.

www.annualcreditreport.com

Types of Credit

Installment Credit (fixed amount) Student Loans Mortgage Loans Personal Loans Car Loans

Revolving Credit (limited amount) Credit cards Utilities Some equity loans

The average consumer has 13 credit obligations on record.


Where Can I Find My Credit Report? www.annualcreditreport.com is the website for your FREE credit report

www.freecreditreport.com is

NOT FREE!!


http://www.annualcreditreport.com/�

http://www.freecreditreport.com/�

Credit Reporting Agencies

Equifax P.O. Box 740256 Atlanta, GA 30374 800-685-1111 www.equifax.com Experian P.O. Box 2002 Allen, TX 75013 888-397-3742 www.experian.com TransUnion P.O. Box 2000 Chester, PA 19022 800-888-4213 www.transunion.com

CHECK THESE VERY

CAREFULLY!!


http://www.equifax.com/�

http://www.experian.com/�

http://www.transunion.com/�

Checking Your Credit Report

Review all information carefully Every detail is important – from the SSN to the individual

account numbers Review your reports every year You can request all three at once or at different points in

the year Check your student loans to make sure they are not

counted twice Only 36% of Americans have checked their credit report in the last 12 months.


Credit Report - Example


Errors on Your Report


To Dispute Items

Follow instructions from credit bureau Send written dispute letters Creditors have 30 days to provide proof If no reply within 30 days (plus mail time), ask to have

negative credit removed If creditor proves cause for negative credit (even outside

of 30 days), it may be reinstated Keep copies of everything!


Requesting a Fraud Alert

Contact law enforcement and file a criminal report Contact any of the agencies – they will alert the

other two Fraud Alert – 90 days Extended Fraud Alert – 7 years

Requires criminal complaint Can make it harder to receive credit

Identity Theft

Credit and debit card fraud is the No. 1 fear of Americans in the midst of the global financial crisis. Concern about fraud supersedes that of terrorism, computer and health viruses and personal safety.

Source: Unisys Security Index: United States, March 2009


Preventing Identity Theft

Buy a cross thread shredder! Do not use your SSN on your license or as your password Do not keep PINs or passwords in your

wallet Never give out personal information over the phone or

online Check your credit card bills carefully Check your credit report annually


Identity Theft Protection

What does an Identity Theft Prevention Service provide? Credit score Automatic fraud alerts Automatic fraud alert renewals Service guarantees or identity theft insurance for up to a certain amount Free annual credit reports and monitoring of those reports Legal help in case you encounter fraud or have your identity stolen Coverage of lost wages Removal from mailing lists Credit card monitoring

However, not every service will provide every benefit! Do your research before

signing up!!


Identity Theft Protection

Pros

Can provide legal support if needed

You don’t need to check your own reports

Peace of mind

Cons

Expensive False sense of security May be hard to end

contract May not be needed


Credit Scores A credit score is a number representing a

person’s creditworthiness; the likelihood that person will pay his or her debt.

Obtaining your credit score is NOT free unless you have been turned down for a loan or insurance because of the score.* *Wall Street Reform Act of 2010


FICO® Score and VantageScore®

FICO Score is the traditional credit rating Fair Isaac & Company Scores range from 300-850

®

Used by most lenders

VantageScore is a new credit rating product offered by the three credit reporting agencies Created in 2006 by Experian Scores range from 501-990 Includes letter grade


FICO® Score and VantageScore®

Predict your risk to a potential lender Higher the score, lower the risk

Determined by information provided to the different credit agencies Equifax TransUnion Experian

Calculation of score is proprietary information


FICO® Score What’s in your score:

What’s NOT in your score: Race/Ethnicity/Religion Age/Sex/Marital Status Salary, Occupation or Employment History Child Support or Alimony Responsibilities Location

The average FICO score is 692.


National Distribution of FICO Scores1

5%8%

12%15%

18%

27%

13%

2%0%

5%

10%

15%

20%

25%

30%

up to 499 500-550 550-599 600-649 650-699 700-749 750-799 800+

FICO Score Range

% o

f Pop

ulat

ion

FICO® Scores

1http://www.myfico.com


VantageScore®

How it’s measured:

Stronger emphasis on the last two years of credit -

better for younger people and immigrant populations Each agency uses a single formula, so scores

should be consistent


VantageScore® Averages

VantageScore Averages2

774

736

698

761

501 545 590 634 679 723 768 812 857 901 946 990

Massachusetts

Lowest State:

Highest State:

National

VantageScore Range

Minnesota

Texas

2www.vantagescore.experian.com/scoreindex.html


Credit Scores

What can you do to increase your credit score?

Pay your bills on time Reduce your overall debt Cancel unnecessary credit cards

However, always keep your oldest line of credit open Ask lenders to reduce your high credit limits

33% of all consumers have had a payment late by 90 days or more. www.annualcreditreport.com

everything you ever wanted to know about credit · credit reporting agencies equifax p.o. box...

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