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  • Many people think that the credit bureaus are responsible for their bad credit. This is not true! The bureaus are in business to help lenders check new applicants. Lenders can access your credit report if you apply for a loan or credit card. Emphasize that credit bureaus are in the business of maintaining credit files — the information in your credit report is furnished by the companies that have loaned you money or issued you a credit card.
  • Explain that we will be reviewing sample credit reports in a few minutes and that during that activity you will go deeper into the topic. What is a credit report used for? Your credit report is used by banks, stores and finance companies to predict the risks of lending you money , based on your history of making payments. Potential landlords and employers use your credit file to evaluate how responsible you are with your personal finances. The decision on whether to rent you a place to live or give you a job can be based on whether you pay your bills on time. Increasingly, insurance companies are using credit reports to determine insurance rates!
  • Essentially, a credit report is a “report card” indicating how you stand on these two items…. Meeting your responsibilities. Not taking on more than you can handle. Suggested definition of good credit: Good credit is a valuable thing to have. It is the ability to borrow money or obtain goods by paying little or no money up front. You promise to pay the original cost later or over time along with interest.* Lenders want to be repaid, so they usually lend only to people who show they’ve been reliable in repaying loans and credit. *Interest is the cost you pay to borrow money or obtain goods over time. Always try to live within your means and pay your bills, loans and credit cards on time. If you become unemployed, at least try to pay the minimum payments to protect your credit.
  • Ask participants what “bad credit” means to them. Here there are no right or wrong answers. This exercise is to gauge the knowledge level of your participants. As the leader, your role is to listen attentively and pull out the general information that can be used by the entire class. Be supportive and encouraging, as well as tolerant of non-specific answers. Write down some responses on the easel pad.
  • What is the difference between good credit and bad credit? Having bad credit is a condition, not a disease, it can be repaired and has nothing to do with whether people are good people or bad people. How might people get bad credit? Stress that a poor credit history often comes from bad money management practices , not from having a low income. ASK: • What can good credit help you to do? TIP: Write down this list on easel pad: • Buy a home • Get a job • Get telephone service • Rent an apartment • Spread out payments for big items (furniture, electronics, etc.) • Finance an automobile • Qualify for better rates on insurance • Get a loan • Obtain a credit card
  • Does everyone have a credit history? Many people do not have a credit history, including people who have never had a loan or a credit card . People who recently entered the work force or are new to the country may not have credit histories. Married women who acquired credit under their husband’s name may not have a credit history, either. If you have become a victim of ID theft , you may find out about it when you check your credit report and see unfamiliar charges, accounts, judgments or other activity that does not belong to you. These things will directly affect your credit score and may certainly cause a creditor to deny you credit. We’ll talk more later about what to do if you are a victim of identity theft/fraud. . .
  • The credit profiles are to be used by participants during a break-out session. These worksheets will help participants consider the credit histories of different people and how their lack of credit or past use of credit affects them. Participants will review sample credit profiles and discuss reasons why the applicants may or may not be approved for credit or a loan. Ask the groups to choose a spokesperson to explain why they approved or rejected each credit request
  • Instructions to trainer: Ask participants to organize into small groups and take out the Credit Evaluation Worksheet from their folders. Participants will review sample credit profiles and discuss reasons why the applicants may or may not be approved for credit or a loan. Ask the groups to choose a spokesperson to explain why they approved or rejected each credit request. After about 15 minutes, call the groups back together. Ask the spokespeople to explain their group’s decisions. In the discussion that results, emphasize that there is no “perfect” credit profile. Each person’s credit report is different and each lender has different rules for granting credit. Even if your credit is not perfect, you may find a lender who will work with you.
  • How do you think Henry’s personal troubles affected his credit ?
  • Explain that credit bureaus do not allow everyone to see your credit report. Only those who can prove a legitimate need may have a copy. In almost all cases, your written or oral permission or your signature on a credit application is required for companies to access your credit. Before allowing access to credit reports, credit bureaus require businesses and individuals to sign contracts in which they agree to use the data properly. ‘ INQUIRIES’ ... On your credit report, you will see listed the names of everyone who has requested a copy in the last six months to two years, depending on the type of inquiry.
  • Explain that consumers can get free annual copies of their credit reports at www.annualcreditreport.com. One study indicated that over 80% (“Boost Your Credit Score”, Parade Magazine, Oct. 2, 2005) of all credit reports contained errors, yet less than 57% of Americans had ever seen or requested their credit reports.
  • Here is the official website: www.annualcreditreport.com. You may apply online or print the credit report request form to mail in. Married couples should order individual credit reports, in their own names.
  • Emphasize the Fair Credit Reporting Act , a federal law which requires that the credit bureaus investigate information that is disputed by consumers . This law gives you the right to challenge the accuracy, validity and verifiability of the information in your consumer credit report. It requires that the credit bureaus delete inaccurate information or information that can’t be verified. Explain that if your credit application is denied, ask the lender or salesperson to provide you with the name of the credit reporting bureau. You are entitled to a free copy of your credit report only from the credit reporting bureau that supplied the information used in the decision. You can get a copy of your credit report any time by paying a fee . You can get an instant report online if you pay with a credit or bank/debit card.
  • Ask participants to take the three sample credit reports from Equifax, Experian and Trans Union from their folders. Review the sample reports with the group. Understand that credit reports will probably be unfamiliar to most participants. Point out the differences in the three credit reporting agencies’ reports. . . Explain that different credit reporting bureaus have different procedures for disputing inaccurate listings. Not all credit information is supplied to credit bureaus. Information that’s given to one bureau may not be supplied to the other bureaus. Once credit reports are received, it’s important to check them for accuracy. Talk about: • How to review the personal identification information for accuracy. • Potentially negative items shown on the sample reports. • One-hundred word statement.
  • Ask students to review the sample credit reports in their folders and discuss, as guided by questions in the leader’s manual. Credit accounts Personal Information: Your name, birth date, past addresses, employers Credit accounts: Company name, account number, date opened, month reviewed, date of last activity, high credit, terms, balance, past due, status, date reported, previous payment history Information about your past and current Credit cards Mortgages Car loans Inquiries Public information: Bankruptcy; Court judgments against you; Past due child support payments; Property tax liens Credit accounts you’ve had in the past seven years (or the past ten years if you filed for bankruptcy).
  • Segue into the personal realm by talking about what people should do when they receive a copy of their own credit report.
  • Take time on this one, some students may be faced with writing an effective letter or statement, help them to understand and appreciate that this is not an insurmountable obstacle and that they may be able to get help with it if needed.
  • Reinforce the positive, goal-oriented message of this slide. RESOURCE: Let participants know that they can find out if they are eligible to join a credit union by calling the Credit Union National Association at (800) 358-5710. Web site: www.cuna.org Close unneeded accounts You may be able to improve your credit standing by closing accounts that you no longer use. If you divorce or separate, make sure that joint accounts are closed.
  • A credit score measures your ability to repay a loan and make payments on time. Credit scores are based on consumer histories at credit-reporting bureaus. Five key factors are considered when calculating a credit score: Requests for new credit – 10% Types of credit in use – 10% Length of credit history – 15% Current total debt – 30% Payment history – 35% A credit score does NOT consider: race, color, religion, national origin, sex, marital status, age, salary, occupation, title, employer, date employed or employment history, where you live, interest rates being charged, child/family support obligations or rental agreements. You can improve your credit score by paying bills on time, keeping low balances on credit cards and other “revolving” credit, applying for new credit accounts only when needed , paying off debt (rather than moving it from account to account), and making sure your credit report is correct.
  • A growing crime is “identity theft” or “ID theft.” While criminals mostly prey on people with decent credit, they can wreak havoc in your life. For example, ID thieves: call your credit card issuer and, pretending to be you, ask to change the mailing address on your credit card account. The imposter then runs up charges on your account. Because your bills are being sent to the new address, it may take some time before you realize there's a problem. They may open a new credit card account, using your name, date of birth and SSN. When they use the credit card and don't pay the bills, the delinquent account is reported on your credit report. ID Theft Center www.idtheftcenter.org
  • Explain that this worksheet can help you get a handle on what kind of credit you might have.
  • The MoneyWi$e program was created by the national non-profit organization Consumer Action with a grant from Capital One. Capital One is one of the largest issuers of credit cards in the U.S. The MoneyWi$e program includes educational materials on credit and personal finances in Chinese, English, Korean, Spanish and Vietnamese.

efa-mått efa-mått Presentation Transcript

  • Understanding Your Credit Report Women In Agriculture Conference January 19, 2007 Dover, DE
    • Megan O’Neil-Haight
    • Family, Youth & Communities Educator
    • Crystal Terhune
    • Family and Consumer Science Educator
    • “ Educating people to help themselves.”
  • By the end of the training you will understand:
      • How to obtain and interpret your credit report.
      • What information on a credit report is seen as negative.
      • That it is never too late to start to rebuild good credit.
      • Some ways to improve one’s credit.
  • How do companies know if you have bad credit?
    • Information about your credit is kept by credit reporting bureaus.
            • Equifax
            • TransUnion
            • Experian
    • This information on file
    • about you is called a
    • credit report.
  • What’s on your credit report?
    • Record of your loans, credit cards, payments and outstanding debts
    • Current and past payment information
      • On-time and late payments
    • Outstanding credit limits
    • and balances
    • Information from public records
    • Record of companies who have asked for a copy of your report
  • What is “good credit”?
    • Meeting your responsibilities.
    • Not taking on more
    • than you can handle.
  • What is “bad credit”?
    • What does bad credit mean to you ?
    • Good credit
    • Reliable in paying bills
    • Bills are paid on time
    • Obligations are met as agreed
    • Companies willing to extend credit
    • Bad credit
    • Unreliable
    • in paying
    • bills
    • Bills are paid late
    • Debts are abandoned
    • Filed for bankruptcy
    • Companies reluctant to extend credit, or charge very high interest
  • How do you know if you have bad credit?
      • Many people first realize they have credit problems when they are turned down for a loan, a job or a rental dwelling.
  • Why is credit denied?
    • No credit history
    • Too much outstanding credit
    • Credit not handled responsibly
    • in the past
  • Credit Profile Activity
    • Evaluate the scenario:
      • Should the applicant be approved for the credit or loan?
  • Credit Profile : Lupita
    • Lupita, 47, got her first credit card
    • when she was 25.
    • She always pays her bills on time.
    • Lupita currently has 4 credit cards. . .
    • In addition, Lupita has a mortgage, a car loan, and a loan for her daughter’s college tuition.
    • She has been an upper manager at a phone company for 22 years, where her annual salary is $80,000.
    • Lupita now wants to finance a new $23,000 car for her daughter.
    • Do you think Lupita will get the loan?
  • Credit Profile : Henry
    • Henry, 33, has been married and divorced
    • twice. He has earned $35,000/yr as a
    • mechanic since age 20.
    • He built a good credit history and had four
    • credit cards; he always made his child support payments on time.
    • He received notice that his paycheck would be garnished for the child support payments when his second wife moved away.
    • Henry was injured, went on disability leave, and couldn’t work for a year. He continued with minimum payments on his credit cards and child support, but he could not afford his car payments, so his car was repossessed.
    • Once he started working again, he decided to apply for a $6,000 loan to buy a used car.
    • Do you think Henry’s car loan will be approved?
  • Who can get a copy of your credit report?
    • You!
    • Only those who can prove
    • a legitimate need:
      • Banks
      • Credit card companies
      • Landlords or real estate
      • companies
      • Employers
  • How can you get a copy?
    • www.annualcreditreport.com
      • Experian, TransUnion, Equifax
    • You’ll need to provide this information:
      • Full name
      • Birthdate
      • Social Security #
      • Addresses & phone#
      • for past 2-5 years
      • Additional security
      • verification answers
  • Start Here
  • It’s your right to see a copy of your credit report!
    • One free copy from each bureau each year.
    • Also free if you’ve been turned down for credit, insurance, or employment (based on your report) within the past 60 days.
    • Free if you become a victim of credit fraud.
    • Otherwise, the cost is about $9/copy.
  • Sample credit reports
    • Let’s take a look at sample reports from the three largest credit reporting bureaus:
      • Equifax
      • Experian
      • TransUnion
    • Credit reports can be
    • complex, so we’ll go
    • over them in detail.
  • Details on your credit report
    • Your name, birth date, past
    • addresses, employers
    • Current credit accounts
    • Inquiries: Companies that
    • requested your credit file
    • Public information
    • Credit accounts you’ve had in the past seven years (or the past ten years if you filed for bankruptcy).
  • You’ve got your credit report. . . now what?
    • Check it carefully.
    • Look for accounts that might not be yours.
    • Verify all credit limits/balances.
    • Make sure accounts you’ve closed say ‘Closed at consumer’s request.’
    • Begin to correct mistakes.
    • Tell your side of the story.
  • Filing a dispute
    • Fill out the form/letter enclosed with your bureau report, and return it back to the bureau.
      • The bureau must respond in 30-45 days
    • If after hearing from the bureau you disagree with their response, you
    • may add up to a 100-word
    • statement.
  • Rebuilding Good Credit
    • It’s never too late to start getting your credit back on track!
    • Pay your existing credit
    • accounts on time.
    • Apply for a credit card or
    • small loan from your bank,
    • credit union, or a local
    • department store.
    • Close unneeded accounts
  • What is a credit (FICO) score?
  • What about ID theft?
    • Notify all three credit bureaus right away & request a “victim’s statement” be placed on file.
    • Immediately notify account holders to close or monitor accounts.
    • File a police report.
    • Contact Federal Trade Commission’s
    • ID Theft Hotline : 877-438-4338.
    • Contact your local office of Consumer Affairs.
  • Take-home activity:
    • The handout titled “How does your credit stack up?” is a credit self-evaluation worksheet.
  • Questions & answers
    • Now’s your chance to ask those nagging questions!
      • Please fill out the evaluation form and leave them on your way out.
      • Adapted from Money Wi$e, a joint financial education project of Consumer Action and Capital One. Please note that the material in this presentation is copyright reserved and can not be reproduced without consent from Consumer Action.
      • Thank You!
    • Megan O’Neil-Haight Maryland Cooperative Extension, Wicomico and Worcester Counties
    • P.O. Box 219, 100 River Street Snow Hill, MD 21863 Phone: 410-632-1972/ Fax: 410-632-3023 oneil@umd.edu
    • Crystal Terhune
    • Maryland Cooperative Extension, Caroline County
    • 207 S. 3 rd Street Denton, MD 21629
    • Phone: 410-479-4030/ Fax: 410-479-4042
    • [email_address]