Understanding Your Understanding Your CreditCredit

There are three major credit There are three major credit reporting agencies in the United reporting agencies in the United States that maintain records of your States that maintain records of your use of credit and other information use of credit and other information about you. The credit reporting about you. The credit reporting agencies are:agencies are:

EquifaxEquifax TransUnionTransUnion ExperianExperian

When you’re applying for credit, When you’re applying for credit, whether it is a credit card, a car loan, whether it is a credit card, a car loan, a personal loan or a mortgage, a personal loan or a mortgage, lenders want to know your credit lenders want to know your credit risk.risk.

In order for lenders to determine In order for lenders to determine your risk, they must pull a Credit your risk, they must pull a Credit Report.Report.

What’s in your Credit What’s in your Credit Report?Report?

Identifying InformationIdentifying InformationYour name, address, Social Security number, date of Your name, address, Social Security number, date of

birth, and birth, and employment are used to identify you.employment are used to identify you.

Trade LinesTrade LinesThese are your credit accounts. Lenders report each These are your credit accounts. Lenders report each

account account you have established with them.you have established with them.

Credit InquiriesCredit InquiriesWhen you apply for a loan you authorize your lender When you apply for a loan you authorize your lender

to ask for to ask for a copy of your Credit Report. This is how a copy of your Credit Report. This is how inquiries appear on inquiries appear on your Credit Report.your Credit Report.

There are two types of inquiries:There are two types of inquiries:* Voluntary (request made by the * Voluntary (request made by the

consumerconsumerYOU)YOU)* Involuntary (request made by lenders to * Involuntary (request made by lenders to

make you make you pre-approved for a product). pre-approved for a product).

What’s in your Credit What’s in your Credit Report?Report?

The inquiries that are requested by a The inquiries that are requested by a lender as a result of a completed lender as a result of a completed application application will affect will affect your “your “credit credit scorescore.”.”

Inquiries made by you, businesses Inquiries made by you, businesses that offer services or goods, and that offer services or goods, and prospective employers prospective employers will not will not affect affect your “your “credit scorecredit score.”.”

Credit Score: What is it?Credit Score: What is it?

Credit score is based solely on data Credit score is based solely on data stored at the major credit bureaus. stored at the major credit bureaus.

EquifaxEquifax TransUnionTransUnion ExperianExperian

It offers a snapshot of a consumer’s It offers a snapshot of a consumer’s (your) (your) credit riskcredit risk at a particular point in at a particular point in time and rates the likelihood that the time and rates the likelihood that the consumer consumer will repay debts will repay debts as agreedas agreed. .

What’s in your Credit Score? What’s in your Credit Score?

Credit Scores are calculated from a lot Credit Scores are calculated from a lot of different credit data in your file.of different credit data in your file.

The data can be grouped into five The data can be grouped into five categories:categories:

Payment HistoryPayment History Amounts OwedAmounts Owed Length of Credit HistoryLength of Credit History New CreditNew Credit Types of Credit UsedTypes of Credit Used

What’s in your Credit Score?What’s in your Credit Score?

30%

15%

10%

10%

35% Payment History

Amounts Owed

Length of Credit History

New Credit

Types of Credit Used

What’s in your Credit Score? What’s in your Credit Score? Payment HistoryPayment History::

Account payment information on specific Account payment information on specific types of accountstypes of accounts

Presence of adverse public records (liens, Presence of adverse public records (liens, judgments, suits), collection items and/or judgments, suits), collection items and/or delinquency.delinquency.

Severity of delinquency.Severity of delinquency. Time since past due items.Time since past due items. Number of past due items on file.Number of past due items on file. Number of accounts paid as agreed.Number of accounts paid as agreed.

Amounts OwedAmounts Owed

Amount owed on accountsAmount owed on accounts

Number of accounts with balancesNumber of accounts with balances

Proportion of credit line used Proportion of credit line used (Revolving Accounts)(Revolving Accounts)

Length of Credit HistoryLength of Credit History

Time since account opened.Time since account opened.

Time since account activity.Time since account activity.

New CreditNew Credit

Number of recently opened accountsNumber of recently opened accounts

Time since recent account openingTime since recent account opening

Number of recent credit inquiriesNumber of recent credit inquiries

Re-establishment of positive credit Re-establishment of positive credit history following past payment problemshistory following past payment problems

Types of Credit UsedTypes of Credit Used

Number of various types of accounts Number of various types of accounts

• credit cardscredit cards• retail loansretail loans• mortgagemortgage

What’s What’s notnot in your score? in your score?

Race, color, religion, sex, national Race, color, religion, sex, national origin, marital statusorigin, marital status

Age, Housing LocationAge, Housing Location Certain types of inquiriesCertain types of inquiries

How does scoring help you?How does scoring help you?

People get loans faster.People get loans faster. Credit decisions are faster.Credit decisions are faster. Credit mistakes count for less.Credit mistakes count for less.

Improving your scoreImproving your score

Pay your bills Pay your bills on timeon time.. If you have missed payments, get If you have missed payments, get

current and stay current.current and stay current. Keep balance lowKeep balance low on credit cards and on credit cards and

other revolving credit.other revolving credit. Pay off debt Pay off debt rather than moving it rather than moving it

around.around. Do not open a lot of new accounts too Do not open a lot of new accounts too

rapidly.rapidly.

How Credit Report mistakes How Credit Report mistakes are made are made

Names (Robert Jones, Bob Jones)Names (Robert Jones, Bob Jones) Clerical errorClerical error Inaccurate Social Security numberInaccurate Social Security number Payments applied to the wrong Payments applied to the wrong

accountaccount

Fixing ErrorsFixing Errors

Contact the credit bureau and the Contact the credit bureau and the company that provided the company that provided the information by certified mail.information by certified mail.

The credit bureau has 30 days to The credit bureau has 30 days to investigate.investigate.

Include supporting documentationInclude supporting documentation Always request deletion or correctionAlways request deletion or correction

Know your rightsKnow your rights

The Fair Credit Reporting Act (FCRA)The Fair Credit Reporting Act (FCRA)

This act is designed to help ensure that This act is designed to help ensure that credit bureaus furnish correct and complete credit bureaus furnish correct and complete information to businesses to use when information to businesses to use when evaluating your application.evaluating your application.

Know your rightsKnow your rights

The Equal Credit Opportunity Act The Equal Credit Opportunity Act (ECOA)(ECOA)

– This act prohibits credit discrimination This act prohibits credit discrimination on the basis of sex, race, marital status, on the basis of sex, race, marital status, religion, national origin, and age. religion, national origin, and age.

Know your rightsKnow your rights

The Fair Credit Billing Act (FCBA) and The Fair Credit Billing Act (FCBA) and The Electronic Funds Transfer Act The Electronic Funds Transfer Act (EFTA)(EFTA)

These acts establish procedures for These acts establish procedures for resolving mistakes on credit billing and resolving mistakes on credit billing and electronic funds transfer account electronic funds transfer account statements.statements.

Know your rightsKnow your rights

The Fair Debt Collection Practices The Fair Debt Collection Practices (FDCPA)(FDCPA)

This prohibits debt collectors from engaging This prohibits debt collectors from engaging in unfair deceptive practices while collecting in unfair deceptive practices while collecting debt.debt.

Know your rightsKnow your rights

Debt collectors can only call between Debt collectors can only call between the hours of 8 a.m. and 9 p.m.the hours of 8 a.m. and 9 p.m.

Debt collectors may not call you at Debt collectors may not call you at work if they know your employer work if they know your employer disapproves.disapproves.

Debt collectors may not harass, Debt collectors may not harass, oppress, or abuse you.oppress, or abuse you.

ContactsContactsEquifaxEquifaxequifax.comequifax.comPO Box 105069PO Box 105069Atlanta, GA 30349Atlanta, GA 303491-800-525-62851-800-525-6285

ExperianExperianExperian.comExperian.com

TransUnionTransUnionTransunion.comTransunion.comPO Box 6790PO Box 6790Fullerton, CAFullerton, CA1-800-680-72891-800-680-7289

Thank you for your Thank you for your participation!participation!

I hope this information has given you some useful tips. I hope this information has given you some useful tips. If you have any suggestions for future seminar topics, If you have any suggestions for future seminar topics, please see Mrs. Edwards or another Student Support please see Mrs. Edwards or another Student Support Services staff member. Services staff member.

If you are viewing this workshop online, please come If you are viewing this workshop online, please come by Student Support Services, 109 Eldridge Hall, and by Student Support Services, 109 Eldridge Hall, and complete an Academic Seminar Evaluation form, so complete an Academic Seminar Evaluation form, so that we may have documentation of your program that we may have documentation of your program

participation. You may also print this form online. participation. You may also print this form online. EXIT